The literature review is a written explanation by you, the author, of the research already done on the topic, question or issue at hand. What do we know (or not know) about this issue/topic/question?

• A literature review provides a thorough background of the topic by giving your reader a guided overview of major findings and current gaps in what is known so far about the topic. 
• The literature review is not a list (like an annotated bibliography) -- it is a narrative helping your reader understand the topic and where you will "stand" in the debate between scholars regarding the interpretation of meaning and understanding why things happen. Your literature review helps your reader start to see the "camps" or "sides" within a debate, plus who studies the topic and their arguments. 
• A good literature review should help the reader sense how you will answer your research question and should highlight the preceding arguments and evidence you think are most helpful in moving the topic forward.
• The purpose of the literature review is to dive into the existing debates on the topic to learn about the various schools of thought and arguments, using your research question as an anchor. If you find something that doesn't help answer your question, you don't have to read (or include) it. That's the power of the question format: it helps you filter what to read and include in your literature review, and what to ignore.

Essentially you will need to:

• Identify and evaluate relevant literature (books, journal articles, etc.) on your topic/question.
• Figure out how to classify what you've gathered. You could do this by schools of thought, different answers to a question, the authors' disciplinary approaches, the research methods used, or many other ways.
• Use those groupings to craft a narrative, or story, about the relevant literature on this topic. 
• Remember to cite your sources properly!