Lore Items are not items a character can equip. The term refers to Lore Books, ancient scrolls, and other such objects found in the dungeons that can be read to learn more about the game's story and world history.
These sorts of items were commonly used in Diablo I and Diablo II to relate the story that was only partially told via quests and NPC dialogues. An improvement to them in Diablo III is the ability of players to listen to the narration (a voice actor reading the text aloud) while they continue playing, rather than having to stop and stand still for the duration.
Some lore items must be assembled; notes are found in parts, and only once all three or four parts are collected can the entire message be heard.