A literature review is a systematic review of the published literature on a specific topic or research question. The literature review is designed to analyze-- not just summarize-- scholarly writings that are related directly to your research question. That is, it represents the literature that provides background information on your topic and shows a correspondence between those writings and your research question.
Different projects involve different kinds of literature reviews with different kinds and amounts of work. And, of course, the "end products" vary.
A literature review is important because it: