Literature is, as has been pointed out in this discussion, not simple to define. I tend to agree with the overall notion presented above: literature is using language artistically.
There is a good deal of subjectivity involved in deciding what constitutes art and artistry and within the arena of "literature at large" there are attempts at even finer distinctions between forms of writing.
The literary novel is a special form of the novel, distinguished from "pulp fiction" or "genre fiction", defined by its aims at being literary art as opposed to literary entertainment.
Generally speaking, we might say that art is an attempt at the expression of something true of the human condition. Maybe that's a bit vague, but it can serve to divide art from entertainment.