Although obesity is typically associated with metabolic dysfunction and cardiometabolic diseases, some people with obesity are protected from many of the adverse metabolic effects of excess body fat and are considered “metabolically healthy.” However, there is no universally accepted definition of metabolically healthy obesity (MHO). Most studies define MHO as having either 0, 1, or 2 metabolic syndrome components, whereas many others define MHO using the homeostasis model assessment of insulin resistance (HOMA-IR). Therefore, numerous people reported as having MHO are not metabolically healthy, but simply have fewer metabolic abnormalities than those with metabolically unhealthy obesity (MUO). Nonetheless, a small subset of people with obesity have a normal HOMA-IR and no metabolic syndrome components. The mechanism(s) responsible for the divergent effects of obesity on metabolic health is not clear, but studies conducted in rodent models suggest that differences in adipose tissue biology in response to weight gain can cause or prevent systemic metabolic dysfunction. In this article, we review the definition, stability over time, and clinical outcomes of MHO, and discuss the potential factors that could explain differences in metabolic health in people with MHO and MUO — specifically, modifiable lifestyle factors and adipose tissue biology. Better understanding of the factors that distinguish people with MHO and MUO can produce new insights into mechanism(s) responsible for obesity-related metabolic dysfunction and disease.