Over the past 20 years, bright sources of entangled photons have led to a renaissance in quantum optical interferometry. Optical interferometry has been used to test the foundations of quantum mechanics and implement some of the novel ideas associated with quantum entanglement such as quantum teleportation, quantum cryptography, quantum lithography, quantum computing logic gates, and quantum metrology. In this paper, we focus on the new ways that have been developed to exploit quantum optical entanglement in quantum metrology to beat the shot-noise limit, which can be used, e.g., in fiber optical gyroscopes and in sensors for biological or chemical targets. We also discuss how this entanglement can be used to beat the Rayleigh diffraction limit in imaging systems such as in LIDAR and optical lithography.