Liches (also spelled lyches, singular lich or liche) are a type of undead, usually a powerful mage who has bound his soul to a physical artifact (called a soul shard or phylactery) in order to cheat death.
Only the most powerful necromancers are able to bind their soul to the mortal realm to escape the fate promised to them by the demons who grant them power. The most powerful liches may split their soul between multiple artifacts in order to ensure their continued existence. Once their living body is killed, their soul remains inside the artifacts, allowing their physical form to remain animated even as their flesh begins to decay away to the bones. Even if said bones are destroyed - even burned to ash by sunlight, as all undead can be - the liche's spirit remains bound to the artifacts, preventing it from traveling to the afterlife. It can then posess a new form, either one the mage prepared in advance or one prepared for it by the mage's loyal servants.
A liche is immortal so long as any one of his soul shards remains intact. These artifacts are usually magically shielded to prevent easy destruction, but can be destroyed by magic, especially holy magic (though they are not sensitive to sunlight). The liche will immediately disentigrate upon the destruction of the last phylactery, his soul no longer bound to this realm. How many soul shards a liche creates depends on his level of power, for a phylactery improperly crafted could potentially destroy his soul forever.