Quantum systems cannot always be treated as isolated from their surroundings since this is an idealization which is not always true. Though theoretical analysis of open quantum systems poses great challenges as one needs to treat many-particle quantum systems as a whole, the system-environment interactions often lead to many interesting effects that are not observed in closed systems. The dissipation of a quantum system is not always a disadvantage and, in fact, if exploited properly in combination of coherent driving, one can steer the system into a desired state. This dissipation driven quantum state engineering technique finds its applications in novel technologies such as quantum computing, quantum simulation, and quantum metrology. In this thesis, we focus on the latter two, and show that using dissipative channels allows us to build quantum devices that have considerable advantages over their entirely coherent analogues.Simulation of many-body problems on a quantum simulator will unlock the potential to provide great insights into a large number of systems especially those that are computationally intractable or experimentally challenging. The two crucial steps towards the successful functioning of quantum simulation are the initialization of the quantum simulators i.e, preparing the system in a known initial state, and the Hamiltonian engineering. While there have been many experiments demonstrating the implementation of the Hamiltonian dynamics on the quantum simulator, work still needs to be done on the problem of preparing the simulator in a suitable quantum state. This is exactly our aim here and we propose a protocol to cool a given system into the ground state of a black-box spin Hamiltonian. The central idea is to use a dissipatively driven auxiliary spin to pull out the excitations in the system, eventually cooling it to its ground state. We show that already a single auxiliary spin is efficient in cooling the quantum simulator to a low-energy state of largely arbitrary Hamiltonians as the resources scale only polynomially with the system size. We also show that our scheme of sympathetic cooling is robust against additional sources of decoherence. The second part of the thesis deals with nanoscale quantum sensing using dissipative first order transition in the magnetization of a system of nitrogen-vacancy point defect centers in diamond. The sensitivity of a generic quantum sensor with non-interacting particles scales as the square root of the number of particles. Therefore, a sensor with large number of particles displays a better sensitivity. However, in the interest of nanoscale sensing, having a large number of particles implies that they are closely packed next to each other. At such high densities, the particles interact strongly with each other posing great challenges to the sensing process. Here, we show that these interactions can in fact be used to trigger a first order phase transition when coupled with controlled dissipation in the system. We study the properties of the phase transition using two- and three-dimensional setups to build a nanoscale quantum sensor that is especially robust against typical disorder imperfections or additional decoherence processes, with the sensitivity not being severely limited by the T2 decoherence time. Since our sensing protocol does not assume too many microscopic details of the process, one can easily apply this to other areas of quantum sensing and metrology.These results especially highlight the fact that dissipation in quantum systems, that is normally considered unwanted, can in fact be a powerful tool that allows us to enable a large list of quantum technologies in the future.