The fifth generation (5G) wireless technology is primarily developed to support three classes of use cases, namely, enhanced mobile broadband (eMBB), ultra-reliable and low-latency communication (URLLC), and massive machine-type communication (mMTC), with significantly different requirements in terms of data rate, latency, connection density and power consumption. Meanwhile, there are several key use cases, such as industrial wireless sensor networks, video surveillance, and wearables, whose requirements fall in-between those of eMBB, URLLC, and mMTC. In this regard, 5G can be further optimized to efficiently support such mid-range use cases. Therefore, in Release 17, the 3rd generation partnership project (3GPP) developed the essential features to support a new device type enabling reduced capability (RedCap) NR devices aiming at lower cost/complexity, smaller physical size, and longer battery life compared to regular 5G NR devices. In this paper, we provide a comprehensive overview of 3GPP Release 17 RedCap while describing newly introduced features, cost reduction and power saving gains, and performance and coexistence impacts. Moreover, we present key design guidelines, fundamental tradeoffs, and future outlook for RedCap evolution.