Hepatic lipidosis is literally fat infiltration into liver cells. When it is severe, it can cause severe problems, including death of affected cats.
Hepatic lipidosis occurs for any reason that forces a cat to begin to metabolize its own body fat rather than energy from food. As far as I know, this disorder probably does not occur as a primary problem. It is usually secondary to something else which causes the cat not to eat. It is more common in obese cats because they tend to metabolize fat more readily than thinner cats. Cats do not metabolize fat well. So the fat globules build up in a "backlog" in the cell, eventually making it unable to perform its normal functions at all.
There are many many things which will cause a cat not to eat for a several days. In many cases, the original cause of the not eating is gone when hepatic lipidosis becomes a problem. In other cases, it is necessary to find and correct the original problem in order to succeed in treating hepatic lipidosis.
The only successful treatment that I know of for this disease is to ensure that your cat ingests sufficient calories to make it unnecessary for him to metabolize fat. Cats with hepatic lipidosis do not usually feel like eating. Therefore, it is usually necessary to force feed them in some way. The most consistently successful approach is to implant a stomach tube through their body wall and feed them through the stomach tube. It make take several months to reach the point a cat will eat on its own again. Many people are reluctant to implant stomach tubes and try to force feed orally or use appetite stimulants. Sometimes this works. Usually when it doesn't work, the cat is much worse off and it may be too late to take the other approach.
At present, the consensus of estimates seems to be that 70 to 80% of cats will recover from this condition if aggressively managed (i.e.- if they are fed adequate calories by whatever method it takes to get them in).
The cause of hepatic lipidosis in most cats is the not eating -- it doesn't matter what made the cat not eat, just not eating for a sufficient period of time can lead to hepatic lipidosis. In some cats, this condition can develop in as little as three days of not eating. In others, starvation for extended periods won't lead to hepatic lipidosis. Overweight cats tend to have a lot more tendency to develop this problem but we have seen it in small thin cats, too. I do not know if any toxins, diseases or other problems can directly cause hepatic lipidosis but I can't recall hearing of any that do.