Thermoelectric power generation is a reliable energy harvesting technique for directly converting heat into electricity. Recent studies have reported the thermal-to-electrical energy conversion efficiency of thermoelectric generators (TEGs) up to 11% under laboratory settings. However, the practical efficiency of TEGs deployed under real environment is still not more than a few percent. In this study, we provide fundamental insight on the operation of TEGs in realistic environments by illustrating the combinatory effect of thermoelectric material properties, device boundary conditions, and environmental thermal resistivity on TEG performance in conjunction with the module parameters. Using numerical and experimental studies, we demonstrate the existence of a critical heat transfer coefficient that dramatically affects the design and performance of TEGs. This provides a set of concrete design criteria for designing efficient TEGs that meet the metrics for field deployments. High-performance TEGs demonstrated in this study generated up to 28% higher power and 162% higher power per unit mass of thermoelectric materials as compared to the commercial module deployed for low-grade waste heat recovery. This advancement in understanding the TEG operation will have a transformative impact on the development of scalable thermal energy harvesters and in realizing their practical targets for efficiency, power density and total output power.