Community-based management of acute malnutrition (CMAM) relies on a food-based approach. However, a comprehensive assessment of their nutrient composition and its impact on treatment outcomes is currently lacking in the extant literature. This narrative review summarizes recent evidence on the efficacy of formulations that contain dairy protein and maintain the density of essential nutrients (type I and type II) in managing uncomplicated acute malnutrition at the community level. The literature used for the evidence synthesis was identified using a two-stage screening process. An electronic search was run on PubMed and Cochrane Library, followed by a backward snowball search to identify efficacy studies. A total of 26 efficacy studies involving food formulations used to treat uncomplicated severe and moderate acute malnutrition were identified. The review found that while more evidence favours the inclusion of dairy in formulations as efficacious in supporting recovery from malnutrition, ambiguity in the conclusive findings between dairy and non-dairy formulations remains due to the varied percentages of dairy protein in different formulations. The type of protein source used in a formulation matters, but other approaches, including fortification, can aid in maintaining the nutrient density of formulations, thereby improving the chances of recovery. However, the inclusion of high-added sugar in therapeutic formulations exceeding the WHO norms is a concern that warrants more attention. Future clinical research should assess outcomes like lean or fat mass changes to confirm the benefits of using dairy or non-dairy formulations to treat moderate and severe acute malnutrition.