The NET Bible translator's notes:
The precise meaning of לִּילִית (lilit) is unclear, though in this context the word certainly refers to some type of wild animal or bird. The word appears to be related to לַיְלָה (laylah, “night”). Some interpret it as the name of a female night demon, on the basis of an apparent Akkadian cognate used as the name of a demon. Later Jewish legends also identified Lilith as a demon. Cf. NRSV “Lilith.”
The definition according to Strong's:
1) "Lilith", name of a female goddess known as a night demon who haunts the
desolate places of Edom
1a) might be a nocturnal animal that inhabits desolate places
I don't know if 1) is based on this passage or is an independent definition. It also says that the word is derived from layil <03915> meaning:
1a) night (as opposed to day)
1b) of gloom, protective shadow (fig.)
Wikipedia doesn't seem authoritative about the word's etymology.
For reference, the passage is part of a judgement against Edom. One English translation is Isaiah 34:14 (ESV):
And wild animals shall meet with hyenas;
the wild goat shall cry to his fellow;
indeed, there the night bird settles
and finds for herself a resting place.
Since the word is a hapax legomenon in the Bible and there seems to be no particular significance to its use here except to show Edom as desolate, I would suggest that one translation is as good as another.