Capillary optical fibers have a broad spectrum of uses, and are distinguished from conventional fibers by the presence of a hollow central void in the core. This work investigates the modal properties of capillary based optical fibers with an emphasis on their application to attain large effective mode area, and to realize tunable optical fiber couplers. It starts with a comprehensive review of the field, followed by analytical results and full-vectorial numerical simulations of the mode area of various fiber geometries. It is shown that novel designs such as the trench-assisted capillary optical fiber transcend the existing limits of effective mode area in conventional fibers. Moreover, the use of magnetic nanoparticle fluid filled three-core optical fibers to obtain dynamically tunable fiber couplers via resonant tunneling is explored. The present work was honoured with the best undergraduate thesis project award in the Indian Institute of Technology, Kharagpur in the year 2010-2011.