Libraries are the "roof" building blocks in Polylith. They are someone else's code, which your code depends upon.
Libraries are identical to the concept you're hopefully already familiar with. They are how we make use of code that our team/organisation hasn't written.
Even though most libraries do have dependencies on other libraries, we chose not to represent that in Polylith. Instead each library is represented as a flat tile which becomes the "roof" of your system's dependency structure. This keeps the representation simpler and ensures that we're not concerning ourselves with details that aren't usually relevant for our work.