What happens when you remove liquidity?

I'm curious to know, when we talk about removing liquidity in the context of cryptocurrency markets, what exactly happens? Does it simply mean taking away the trading pairs and making it harder for traders to buy and sell? Or does it have a deeper impact on the market dynamics, perhaps influencing price stability, market depth, and even the overall sentiment? I'm eager to understand the intricacies of this process and how it might affect investors and traders in the long run.