What is a "drop" in an engine ? Why is it required, and when does it need to be changed ? Also, what is a lifter, and what does it do ? Thanks.

Are you sure you aren't referring to a "drop-in engine"? That would be a replacement engine.
Relating to a conventional OHV internal combustion engine; a lifter works with the camshaft and other components to open the intake and exhaust valves.