There are many examples of allegory in literature, but one of the most well-known is "Animal Farm" by George Orwell. The animals in the story represent people involved in the Russian Revolution.
The characters, settings and symbols in an allegory have both literal and figurative meanings. In "Animal Farm," Manor Farm represents Russia, with Mr. Jones filling the role of the Russian Czar. Boxer represents the working-class people of Russia, while Snowball is a stand-in for Leon Trotsky.
Dante's "Inferno" is another good example of allegory in literature. Dante's pilgrimage is a representation of searching for purpose in the world. In the story, Virgil serves as Dante's guide, but he also represents human wisdom.