The launch vehicle is the initially working part of a rocket (or any other vehicle), which lifts and accelerates the craft from the launchpad to low orbit (or near to that state). To ensure this amount of thrust usually rocket engines are applied (although jet engines can be used too, but these are not able to achieve stable orbit alone), enhanced with liquid or solid rocket booster placed on decouplers, in case of liquid fuel boosters, asparagus staging gives a further enhancement. If we interpret the therm widely, an SSTO spaceplane capable to carry payloads is a launch vehicle too.
The power and the efficiency of a launch vehicle is measured in mass of the payload can be transferred to low orbit, and the ratio of this mass and the whole starting mass. In case of Kerbin, a launch vehicle with proper construction needs approximately 3200 m/s Δv to reach the stable orbit, and the payload ratio is about 15-20%. In the real world, 1% payload ratio is quite acceptable.
Launch vehicle on Wikipedia