When defining a literature review, it's helpful to think of a scholarly topic as a narrative, a story. All scholarly research on the topic will fall somewhere within this narrative, with established research providing the framework and new research filling in the details or adding new chapters. Your job, in developing a literature review, is to tell the story of your topic.
Literature reviews come in different flavors. Most scholarly articles will contain a literature review section, which puts the author's research in the context of the existing literature--it tells what questions about the topic have already been explored, what has been found, identifies gaps and sets the stage for the question that (s)he is about to explore. Sometimes this section is labeled "Literature Review," other times it may appear in an Introduction section, and sometimes it can be completely unlabeled. Some scholarly works are entirely literature reviews--you'll sometimes hear the terms "systematic" review or "critical" review. These works strive to report a complete overview of the research performed on a topic, including ALL relevant findings as well as any theoretical frameworks that have been developed as a result of the research.