I am not a fan of linguistic legalism, and I recognize the need for terminological shortcuts, but I am an advocate for clarity, and the use of an ambiguous term like literal can create confusion. It’s a single term with multiple meanings and connotations—which is true of many words—but the problem is that many assume it means only one thing. Some use it to mean the plain or natural sense of a word. Others use it to mean non-figurative. A lot of people treat it as the “actual” meaning of a term. Still others see the word as bound up with historicity. And of course the word is often used as a shorthand for the etymology of a word, or even a wooden translation. And this is just getting us started.

A moratorium on the word, therefore, would yield greater understanding and clarity, and less talking past one another.

Since I have no real authority to call for an actual moratorium (and it has little chance to be enacted), my alternative proposal is that when someone asks you if you take the Bible “literally” or a passage “literally,” you ask what they mean by the word and then proceed to answer in accordance with the definition they provide.

In order to show that the word literal and its usage has multiple meanings, shades of nuance, and varying connotations, consider this analysis from Vern Poythress. In it, he identifies at least five different uses of the term.

1. First-Thought Meaning (Determining the Meaning of the Words in Isolation)

First, one could say that the literal meaning of a word is the meaning that native speakers are most likely to think of when they are asked about the word in isolation (that is, apart from any context in a particular sentence or discourse). This I have . . . called “first-thought” meaning. Thus the first-thought meaning of “battle” is “a fight, a combat.” The first-thought meaning is often the most common meaning; it is sometimes, but not always, more “physical” or “concrete” in character than other possible dictionary meanings, some of which might be labeled “figurative.” For example the first-thought meaning of “burn” is “to consume in fire.” It is more “physical” and “concrete” than the metaphorical use of “burn” for burning anger. The first-thought meaning, or literal meaning in this sense, is opposite to any and all figurative meanings. We have said that the first-thought meaning is the meaning for words in isolation. But what if the words form a sentence? We can imagine proceeding to interpret a whole sentence or a whole paragraph by mechanically assigning to each word its first-thought meaning. This would often be artificial or even absurd. It would be an interpretation that did not take into account the influence of context on the determination of which sense or senses of a word are actually activated. We might call such an interpretation “first-thought interpretation.”

2. Flat Interpretation (Taking It Literally If at All Possible)

Next, we could imagine reading passages as organic wholes, but reading them in the most prosaic way possible. We would allow ourselves to recognize obvious figures of speech, but nothing beyond the most obvious. We would ignore the possibility of poetic overtones, irony, wordplay, or the possibly figurative or allusive character of whole sections of material. At least we would ignore such things whenever they were not perfectly obvious. Let us call this “flat interpretation.” It is literal if possible.

3. Grammatical-Historical Interpretation (Discerning the Meaning of the Original Author)

In this type one reads passages as organic wholes and tries to understand what each passage expresses against the background of the original human author and the original situation. One asks what understanding and inferences would be justified or warranted at the time the passage was written. This interpretation aims to express the meanings that human authors express. Also it is willing to recognize fine-grained allusions and open-ended language. It endeavors to recognize when authors leave a degree of ambiguity and vagueness about how far their allusions extend. Let us call this “grammatical-historical interpretation.” If the author is a very unimaginative or prosaic sort of person, or if the passage is part of a genre of writing that is thoroughly prosaic, the grammatical-historical interpretation of the passage coincides with the flat interpretation. But in other cases flat interpretation and grammatical-historical interpretation will not always coincide. If the author is trying to be more imaginative, then it is an allowable part of grammatical-historical interpretation for us to search for allusions, wordplays, and other indirect ways of communicating, even when such things are not so obvious that no one misses them.

4. Plain Interpretation (Reading It As If It Was Written Directly to Us)

“Plain interpretation,” let us say, is interpretation of a text by interpreters against the context of the interpreters’ tacit knowledge of their own worldview and historical situation. It minimizes the role of the original historical and cultural context. Grammatical-historical interpretation differs from plain interpretation precisely over the question of the primary historical and cultural context for interpretation. Plain interpretation reads everything as if it were written directly to oneself, in one’s own time and culture. Grammatical-historical interpretation reads everything as if it were written in the time and culture of the original author. Of course when we happen to be interpreting modern literature written in our own culture or subculture, the two are the same.

5. Literal in the Technical Sense (The Opposite of Figurative)

Of course the word “literal” could still be used to describe individual words that are being used in a nonfigurative sense. For instance the word “vineyard” literally means a field growing grapes. In Isaiah 27:2 it is used nonliterally, figuratively, as a designation for Israel. By contrast, in Genesis 9:20 the word is used literally (nonfiguratively). In these instances the word “literal” is the opposite of “figurative.” But since any extended passage might or might not contain figures of speech, the word “literal” would no longer be used to describe a global method or approach to interpretation.

You can read the whole article here.

The bottom line: “literal” is an ambiguous word, and in many contexts it should either be avoided or defined in order to facilitate clarity in communicating meaning.