According to the Encyclopedia of Research Methods, "literature reviews are systematic syntheses of previous work around a particular topic."
A literature review finds, summarizes, organizes and presents a body of knowledge on a topic. A literature review can be a stand alone document that only examines the literature on a specific subject.
A literature review might also be one section of an academic paper. This section introduces a topic and significant research in the field. A review of the literature on your topic will help frame your research and explain why it is important.