Lime is a solid additive made from pulverized limestone & chalk. It increases the pH of acidic soil (the higher the pH the less acidic the soil), provides a source of calcium & magnesium for plants, permits improved water penetration for acidic soils, and improves the uptake of major plant nutrients of plants growing on acidic soils.
The primary reason to apply agricultural lime is to correct the high levels of acidity in the soil. Acid soils reduce plant growth by inhibiting the intake of major plant nutrients (nitrogen, phosphorus & potassium).
Soils become acidic in a number of ways. Locations that have high rainfall levels become acidic through leaching. Land used for crop and livestock purposes lose minerals over time by crop removal and become acidic.