Believe it or not, LIT (aka Microsoft Reader) is actually an early version of ePub, which is probably why it converts so well.
Apparently the IDPF people who now managed the ePub standard built on Microsoft's proposals for an open e-book format, which is why when you open them up, LIT files have an internal structure similar to ePub (.opf files and whatnot).
Also, welcome to MobileRead, ksmith100056!
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