It is standard practice in the academic world to draw upon the work of others. Writing is a primary form of communication for scholars; it is through their publications that they present their own ideas about a subject and respond to the work of their colleagues. By referring to other publications, you show whose work you are drawing upon or discussing.
There are several reasons for crediting literature:
When you make use of other people's information in your own work, you are always required to credit your sources. This applies to information of all kinds: facts, research data, a research method and so on. It also applies if you draw upon somebody else's ideas or criticize their work. And it applies to visual as well as written information; when you reproduce an image, graph, table or diagram, you must state where it comes from!
It does not matter whether the source you are using has been formally published or not. Information taken from, say, a lecture or another student's essay or dissertation has to be credited as well.
You do not need to credit your sources when you are reporting a ‘generally known' fact. If you state, for instance, that the Berlin Wall fell in November 1989, that is such a fact which does not require a reference.
Two rules of thumb: