A liquidity pool is a smart contract or dApp holding a shared set of funds (tokens) contributed by users. Liquidity pools are used in DeFi in a wide range of different products and services. Some examples of these include:
Lending - where users deposit funds into a liquidity pool in return for yield on lent assets. Aave is an example of a lending dApp.
Yield Optimization - where users deposit funds into a liquidity pool, and that pool then re-invests those assets to generate yield. Yearn.finance is an example of a yield optimization dApp.