A literature review is an evaluative process that allows you to address and learn more about your research question by exploring the related research literature.
A "lit review" is essentially an overview.
Often, it is formalized and written down. A literature review covers these two main points.
What is known/has been said about the issue you’re researching
What’s not known & why it’s important to know it
The literature review allows you to demonstrate due diligence in addressing these two questions. Is there similar research literature that addresses the issue you’re studying—why are these publications important and what do they tell us that could apply to your question?
Have you been able (through the literature review) to identify questions that published research does not answer? In other words, can you now make a case for why further study of your research question is important to the field?
Above: Harvard University Graduate School of Education, Literature Review: A Research Journey instructional video.