A literature review is both a process and a product. As a process, it involves searching for information related to your topic to familiarize yourself with the relevant research. This process also helps you identify issues and gaps in the research. Remember that you are seeking to identify the key authors and key arguments that are relevant to your topic, not to exhaustively read everything written on the subject.
You will need to find ways to systematically document your search process (where you have searched and your search terms), to keep track of what you have read (look into bibliographic/citation software), and to summarize key points from relevant literature.
As a finished product, a literature review tells the reader the current state of understanding about a topic. However it is more than a summary of what you have read, it is a critical analysis, which argues the need for your own study. It provides a context for your own research, by showing the relationship between it and existing scholarship.
A literature review can be a component of a research paper, or it can be published on its own as a 'review article.' A literature review is a mandatory part of every thesis and dissertation.