Literary allusion is the evocation of one text by another, signalled by overlap of shared language. Unlike quotations, they are not explicitly signalled by the author (contrast, e.g., the explicit quotation in Matthew 3:3, "For this is he who was spoken of by Isaiah the prophet, saying,...") and so rely on the reader's familiarity with the "evoked" passage for the literary connection to be made.
The lines between quotation, allusion, and mere echo can often be blurred and are the subject of debate among biblical scholars. Likewise, identification of allusions in any particular case might be contested. The value of making such an identification is in the added resonance and depth of meaning that the alluded text brings to the new context.