A LAN is a Local Area Network. It is the (local, as in personal, in close reach) network of devices you create when you connect your computer to a router, or add other devices that communicate over a network. Each device has it's own IP address, so that each device can successfully identify and communicate with each other (like friends having names, so you can individually address and speak). That particular IP address is most often used for the router itself. Your router. Don't worry a bit that Little Snitch is noticing that you have another device on your local network that you intended and recocognize.
If you have more than one computer or similar device, they can communicate with each other through a network created and managed by your router. Such a network is called a "local area network" or LAN.
Every device on that network including the router has a unique IP (Internet Protocol) address. These days an IP address consists of four integers in the range 0 to 255 separated by a decimal or dot, for example 192.168.1.1 (very soon we will need more complicated IP addresses than that but don't worry, if your router is relatively new you won't have to think about it).
Your router apparently has an IP address of 192.168.1.1. It is responsible for issuing IP addresses to all the devices that use it. They are usually consecutive so the first one it issues will be 192.168.1.2, the next is 192.168.1.3 and so forth. Many more than that becomes a moot point since most home routers are not capable of administering more than 50 devices.
When one of your computers or devices wants to communicate with another device, your router forwards the request to the specified server containing the information, wherever in the world it happens to be, and returns the results to the device on your LAN that requested it. Those web pages, emails, files etc that exist outside your LAN are considered on the Wide Area Network or WAN.
The Internet is built with routers, countless numbers of them, communicating with each other through a variety of infrastructures - cable, fiber optics, microwave, etc.
So Little Snitch is simply recording outgoing requests to the address of your router. There will be millions of them. Little Snitch is a very good utility to have but you will find many similar requests. Use it for a minimum of a few weeks and you will become familiar with what is normal and what could be reason for concern.