Liquidity Pool
A shared pot of two or more assets locked in a smart contract that traders trade against and depositors earn fees from.
Depositors, called liquidity providers, add assets and receive a token or position that records their share of the pool. Traders swap against the pool, and each swap changes the ratio of assets held, which is what moves the quoted price. The depth of a pool determines how much a given trade moves that price, so a large trade against a small pool is expensive regardless of what the asset trades for elsewhere. When a provider withdraws, they receive their share of whatever mix the pool now holds, plus accumulated fees, not the exact assets they put in.
In practice
A pool pairing an asset with a stablecoin lets a trader swap between the two at any hour without waiting for another trader to appear.
The common misunderstanding
Depositing into a pool is not the same as keeping the two assets separately; withdrawal returns the pool's current mix, which shifts as traders swap.