I think there is an important distinction between reading for pleasure and studying literature. I can be very intellectually engaged in reading very challenging novels, but I am still only reading unless I consciously stop to analyze what an author is doing and why, and consider how those literary choices by the author were made and how they contribute to the meaning of the work as a whole. If I am not actively thinking about these topics, I not studying, I am just reading.
To truly study literature, I believe that one must have a general knowledge of each literary movement (and its connection to history) associated with three particular (albeit incredibly wide) areas: British Literature, American Literature, and World Literature. (If the person is not from The United States, then American Literature can be lumped into World Literature and the main subject can be the country of origin, in my view.) No cheating here. High school knowledge isn't enough (i.e. one can't just learn, test, and forget). One must be able to "have a conversation" about each. Academic ease not needed, just realistic conversation. Luckily, a liberal arts college environment provides enough academic specialty to achieve this. The wonderful thing is, a true student of literature is "allowed" his or her own opinions on what pieces are "the best"; however, the student MUST have appreciation for all, even classic pieces he/she dislikes.
The study of literature entails the analysis of a combination of things: Writing style, use of language, the employment of literary techniques, the use of tone and the effects of the atmosphere on the plot.
Like the previous poster stated, the historical context is also an important part of the study of literature because literature undoubtedly mirrors the social trends of its time of publication.
Above all, the study of literature can also be a beautiful journey through time and the discovery of a myriad of diverse ideals, each narrated through a different voice. It is the best thing in the world. It is a form of self-discovery.
Studying literature is studying history, for the written word of the literary arts is the recordings of the human heart, the struggles, the tragedies, the conditions of the time, the workings of the mind. To read literature is to understand man.
Studying literature is a means of broadening our personal selves. When we read and reflect on literature, we have some sort of personal response. This forces us to agree or disagree, and we must then support our ideas with reason and logic. This broadens us. Whether we agree with the themes, ideas, emotions, etc. being expressed, our very act of reflection forces us to grow.
People have different ideas about what body of work "literature" encompasses. Works of literature are usually expected to be exemplary works of art with profound things to say about the human experience; however, for some, the definition of literature is broadening. For classicists, the literary canon is comprised of works that have been considered "great" for an extremely long time, e.g. Shakespeare's Hamlet or Dante's Inferno. Admittedly, these types of texts are amazing works of art. However, there is the glaring fact that most if not all traditionally canonical texts are written by DWEGs (dead white European guys); they don't really include the creative genius represented by female authors, authors of color, or any contemporary writers.
More inclusive academics (which I would argue represent the current majority) include literature from a broader source--world authors, authors of many races, gender identities and time periods. However, standards still exist for the selection of these texts. Books that win major prizes or recognition from a prestigious source have a better chance of being considered literature rather than "beach reads." Also, innovation in style, complexity in plot and characters, and depth in the thematic messages of a text are also desired traits in texts we know as literature.
Some very open minded scholars consider literature to be in the mind of the beholder, and expand their definition of literary texts to include anything that can be examined or studied, from Charles Dickens to family snapshots to political speeches to YouTube videos. They essentially throw idea of a canon out the window. This approach allows scholars to examine the way messages are created and portrayed in a more versatile way, as well as to look for meaning in unexpected places. However, it's definitely an alternative view of what literature means.
Literature study can be the study of "literature" according to any of these three approaches, but it always means examining a text, forming opinions about it, extracting meaning from it, learning about its context, and sharing ideas about it with others.
There are a multitude of reasons to study literature. Studying literature can mean to read deeply and thoughtfully. It can involve thinking and reacting to the words that have been written and the many layers of meaning conveyed by those words. To truly study literature means to take the time needed to reflect and apply those meanings to your personal experiences and/or to situations you see in other situations.
Studying literature means opening your mind to new vocabulary, new ideas, different perspectives and opinions, and whole new areas of knowledge. In the process of studying, you need to evaluate the worth of the content and determine how you feel about it, whether or not you consider it to be valid and of worth for your life, and if it should be incorporated into an expanded awareness or appreciation of your world.