Loli

Loli is a term derived from the word "lolicon", a Japanese abbreviation of the phrase "Lolita Complex", which means a fascination or fetishisation of underage girls. A loli is just such a character; a cute pre-teen or early-teenage girl, or older girl who simply appears to be that young, intended to provide Fanservice - the character may or may not be depicted engaging in inappropriate behaviour with an older character. The male equivalent is "shotacon" (or, as a character type, "shota"). As one can understand, most Western fans, and most of the agents, find it unspeakably creepy and Squicky. In Japan it's legal as long as it's clearly fictional and shows up in some anime and manga, but it doesn't cross cultural boundaries well.

Laura of legolas by laura may be an unintentional loli, as the author apparently forgot that the character was only supposed to be ten when she made the rampantly OOC Legolas agree to "be her boyfriend". Naruto in For Your Eyes Only probably counts as a shota even though he's supposed to be a sixteen-year-old boy, because he behaves and is treated like a stereotypical four-year-old girl...excluding the sex and pregnancy.

Despite what her father attempted to do to her in That Series, Molly Rath is not a loli, as that scene was intended to show how evil he was rather than provide fanservice.

Not to be confused with loli fashion, which is a style of dress also popular in Japan inspired by Victorian children's clothing, a better description and examples of which can be seen here.