In a literature review you explore research that has come before you and is relevant to your topic. It can help you identify:
core research in the field
experts in the subject area
methodology you may want to use (or avoid)
gaps in the literature -- or where your research would fit in
see what literature reviews already exist on your topic (databases like PubMed and PsycInfo -- can help you get started, and save you a lot of time.) For PsycInfo, restrict by literature review, for PubMed by review.
citation slogging (aka "snowballing") -- work your way back through citations (or footnotes) to key articles