This article presents a comprehensive review of the principles and characteristics of three-dimensional (3D) channel models. We propose a framework for a 3D channel extension of the widely used two-dimensional (2D) 3GPP/ITU generic channel model. We describe the main components and challenges of the newly proposed 3D channel model and the motivations that lie behind them. 3D channel models specify multipath elevation angles as well as azimuth (or horizontal plane) angles. This enables the evaluation of 3D MIMO techniques such as Full Dimension (FD) MIMO and per user 3D beamforming. We also provide a state-of-the-art review on the evolution of channel models. The article ends with a discussion on the impact of 3D channel modelling on system level performance.