Lily Weatherwax is the sister of Esmerelda Weatherwax, who believes herself to be the good witch of the pair. She uses the alias Lilith de Tempscire. This is her name as the power behind the throne of Genua, and is made up of two French or indeed Genuan words (temps, meaning weather, and cire, meaning wax).
As with all Weatherwaxes, she has powerful magic abilities. She is one of the Fairy Godmothers of Princess Ella. To increase her magical potential, she uses mirrors. Mirrors are a big theme in the book Witches Abroad, with the good and the bad godmother (Lily versus Magrat), the old and new Genua, and the good versus the bad sister. Granny blames Lily for being the bad sister and having all the fun, while she had to be the good one.
In Genua she tries to use the power of stories to make Ella marry the Duc, thus fulfilling Lily's wish as a Fairy Godmother that Ella would marry a prince. This plot is interrupted when the Lancre witches show up and interfere with the story (as witches do, of course). Lily and Esme are not on good terms, although Esme does try to "save" Lily because she is family.
At the end of the book, Lily is not dead, but is in a state between life and death inside the mirror. Unlike Granny, she doesn't know which Lily is the real one and presumably will search forever for herself. This proves the danger of using mirrors combined with magic.