Reviewing article and bad-faith citation I did my PhD topic in mechanical engineering. A decade later, I agreed to review an article on the exact same topic, that has a great number of similarities with mine. OK, that can happen.
The authors do cite my PhD manuscript (not the related peer-reviewed articles, by the way) but only once throughout the paper and in a short misleading sentence. Let's say my PhD was about counting from 1 to 20, an analogy would be to say something like &quot;X managed to count up to 2 [ref]&quot;. OK, reading too fast can happen too.
The main thing I am uncomfortable with is that the submission is supervised by someone who was in the jury of my PhD defense ten years ago and knows my work well and acknowledged it is a strong text. I am certain that this conduct is intentional. I see several reasons why they would try to minimize my work:

Their article brings nothing new (the novelty claims have all been already addressed during my thesis);
I proved that the scope of the article should be achieved computing some certain quantities, and they never did that (because it is much more difficult). They have several possibilities. Manage to compute the quantities: they apparently do not want to. Disprove my claim: very unlikely. Ignore my work from the literature review: dangerous. Inappropriately cite my work: what they chose.

I am convinced that they purposely omitted nearly all of my PhD thesis to have a higher chance of having their article published. They have been citing my articles inappropriately every couple of years, but the consequences were minor (in terms of science).
What would you do?
Edit One comment and one answer indicate that whether this behaviour is intentional or not does not matter at all. That is precisely what is not clear to me. When someone submits wrong data supporting a claim in an article, if they just plotted the wrong curve it is a mistake. If it they made up data, it is fraud. That makes a difference to me...
If you are certain the article is not novel, you should recommend to the editor that the manuscript be rejected.  Give detailed references in your review.
It is impossible to know if the poor citations are deliberate or accidental.  It also does not matter at all.