The English language is full of paradoxes, like the fact that "literally" pretty much always means 'figuratively.' Other words mean their opposites as well--"scan" means both 'read closely' and 'skim.' "Restive" originally meant 'standing still' but now it often means 'antsy.' "Dust" can mean 'to sprinkle with dust' and 'to remove the dust from something.' "Oversight" means both looking closely at something and ignoring it. "Sanction" sometimes means 'forbid,' sometimes, 'allow.' And then there's "ravel," which means 'ravel, or tangle' as well as its opposite, 'unravel,' as when Macbeth evokes "Sleepe that knits up the rauel'd Sleeue of Care."

No one objects to these paradoxes. But if you say “I literally jumped out of my skin,” critics will jump on your lack of literacy. Their insistence that literally can only mean, well, ‘literally,’ ignores the fact that word has meant ‘figuratively’ for centuries.

The literal meaning of literally, which enters English around 1584 at a time when the vocabulary was really exploding, is ‘by the letters.’ The word comes from Latin littera, which means ‘letter,’ as in the letters of the alphabet, so writing something out literally meant writing it letter by letter. But by 1646 literally had developed its first extended sense, ‘word for word.’ A literal translation is one done word for word, not letter by letter. And by the 19th century Byron uses literally to mean something even more general, ‘a faithful rendering.’ His poem “Churchill's Grave, a fact literally rendered” (1813) may be a faithful rendering of what Byron saw when he visited the poet Charles Churchill’s grave, but its use of literally is undeniably figurative. This sense of 'faithful rendering' is what people who insist on a literal reading of sacred texts or the constitution mean: it's a figurative use of literal to mean 'faithful to the original intent,' assuming such intent can ever be determined.

Today few people use literally to refer to literal situations. Take this 1906 citation from the Oxford English Dictionary: “Mr. Chamberlain literally bubbled over with gratitude.” This isn’t literal: Chamberlain wasn’t blowing bubbles, he was just very grateful. A cite dated 1922 acknowledges the figurative nature of literally even as it gently criticizes the usage: “The things ‘they’ say! They even say..that ‘literally’ bears the same meaning as ‘metaphorically’ (‘she was literally a mother to him,’ they will say).”  

According to Merriam-Webster’s online dictionary, literally can mean both ‘in a literal sense’ and ‘virtually.’ A usage note acknowledges that some people find the second sense, which is often hyperbolic, “a misuse.” And the OED is firmer in insisting that this hyperbolic use is incorrect: “Now often improperly used to indicate that some conventional metaphorical or hyperbolical phrase is to be taken in the strongest admissible sense,” as in this 1863 citation, “For the last four years..I literally coined money.”

Other authorities denounce figurative literally as “misleading or ridiculous,” “misguided,” and “overused.” One warns that the practice can lead to ludicrous images, and another sniffs, “If you write I literally died laughing, you must be writing from beyond the grave.” And speaking of literally coining money, Henry Fowler saw the misuse of literally as nothing short of counterfeiting: "Such false coin makes honest traffic in words impossible."

H. W. Fowler, A Dictionary of Modern English Usage (Oxford: Clarendon Press, 1926, s.v.)

But such criticism isn’t entirely fair. If you say, I was literally climbing the walls, a common expression of extreme agitation, purists respond that you can’t literally climb a wall, unless it’s the climbing wall at the gym. But no one would ever use literally climbing the walls to refer to a literal act of wall-climbing unless they were pointing out the irony of literally being used literally, instead of in its more customary figurative sense. 

High anxiety? You wouldn’t say “literally climbing the walls” to refer to a climbing wall except to point out a rare, ironic instance of literally being used literally. Get it? He’s literally climbing the wall. As the kids might say, “hahaha.” Or as the grown-ups might say, “Go figure.”

Literally died laughing and literally climbing the walls evoke silly images, it’s true. But no one’s really going to say I figuratively died laughing/climbed the walls. The solution is to give up literally, and find a different intensifier for “it was funny” or “I was agitated.” But people have grown attached to figurative literally, which to them has come to mean ‘virtually, a lot.’ Words change over time, and that change tends to be bottom up rather than top down. Most people don’t listen to the critics when they make their language choices.

Like it or not, language often defies the constraints of logic, consistency, and etymology. Delirium, ‘a state of mental disorder,’comes from a Latin farming word meaning ‘to go out of the furrow when plowing.’ Yet the word is always used figuratively. A city dweller who is nowhere near a furrow can suffer delirium from a high fever, and no farmer in their right mind would call a runaway tractor delirious. Decimate literally means ‘to reduce by one-tenth,’ but the word is typically used to signal ‘a large reduction.’ No one interprets Europe was decimated by the plague as a ten-percent downsizing of the population; no advertiser trumpets a 10%-off sale with the slogan, “our prices are decimated!”

As if on command, this headline's noniteral use of "decimate" appeared in today's New York Times.

But the literal-minded draw the line at accepting figurative literally, because they care so deeply about the letters and words to which they think literally refers. Fortunately, the literal-minded aren’t language style setters, and they never find themselves in a position to say, “For the last four years..I literally coined words.”

The fate of literally will ultimately depend not so much on the classification of one of its common uses as an error, but on the amount of actual ambiguity it generates (the silly images don't help much, either). If the resulting meaning isn’t clear, people will start to avoid figurative literally. And theymay find themselves backing away from the word for another reason too. Literally has come to function as an intensifier (see the cartoon below), and intensifiers lose their intensity with repetition. Very (from veritas, ‘truth’) once meant ‘truly.’ Nowadays the word doesn’t have much to do with truth, and it isn't very intense, either. Terrible once meant ‘inspiring terror.’ Now it means, ‘not so good.’

If hyperbolic, figurative literally fades, it won’t be because hypercritics finally had an impact on usage, but because the word lost its intensity and people simply tired of it. I literally died laughing can’t compete with Coke was coming out of my nose, which gives wayto LOL, which is replaced by the very understated intensifier popular in texting, hahaha. As for literal literally, that letter-by-letter sense of the word was already a lost cause by the 17th century.

If you’re tempted to correct someone’s figurative use of literally, remember, nobody likes a smartass. XKCD