PEDANT ALERT - this post is about the correct use of the English Langauage and is pedantic in the "Devils dictionary" sense of wanting to get things right. If you find that boring or irritating, please don't read it.
The word "literally" has a highly specific meaning, indicating that a statement is true, or has been understood to be true, in the usual meanings of the words and without any metaphor, allegory, or exaggeration.
In a society which is highly prone to exaggeration and metaphor, it is extremely useful to be able to express by adding one word that a particular statement is precisely correct without either metaphor or exxageration having been employed. E.g. "He was so angry that he literally shook with rage" means that he really did physically shake.
It is also helpful to be able to describe as "literal-minded" somone who is prone to assuming that a statement which had been intended as a metaphor or a figure of speech is actually a precise description of the real situation.
E.g. if someone is taking a comment too literally if they respond to the words "My Dad's going to kill me!" by offering to call child protection when the speaker merely meant her father was likely to give her a severe telling off. And it is useful to be able to describe such a misunderstanding or interpretation as "taking literally" the statement concerned.
Unfortunately for as long as the word has existed a certain number of ignorant people who don't know what it actually means, and people who should know better but have been careless or fallen prey to a slip of the tongue, have made the mistake of employing the word "literally" to give extra emphasis in circumstances where it does not apply. Apparently the first known instance of this misuse of the word goes back as far as 1769.
The common, and appropriate, response to this until very recently from people who know what the work actually does mean has been to laugh at this use as a malapropism, and a frequently amusing one.
For example, Sir Ian Botham said in 2007 that batsmen who were dubiously given "not out" in response to justified LBW appeals were "getting away with murder, literally." He should have been asked - and probably was - who they had killed. (His comment was certainly and entirely justifiably the subject of much amusement.)
However, the press noticed this week that in 2011 the Oxford English Dictionary revised the definition of "literally" to accept this malapropism as an "informal" use of the word on the basis that because so many people make the mistake the dictionary should recognise that the word is often used in this way.
Excuse me? Millions of people every day put the apostrophe in the wrong place when writing "it's" or "its'" or accidentally reverse the order of the letters i and e. Does that mean we're going to change the language to accept their mistakes too?
Admittedly the OED's new wording does recognise some of the problems with this interpretation. After defining the word as meaning "in a literal way or sense" it adds that, informally, it can
be "used for emphasis rather than being actually true" and then the dictionary goes on to warn that
"This use can lead to unintentional humorous effects (we were literally killing ourselves laughing) and is not acceptable in formal contexts, though it is widespread."
Now, ninety-nine times out of a hundred I prefer the English approach of letting a language grow and develop in line with the way people actually use it to the alternative approach, of which French is the best example, of trying to have a language which is regulated and controlled by academic language experts. But this is the hundredth time where that does not apply.
To put it another way, this is the one time in a hundred when the pedants and language fusspots are actually right and have an overwhelming case.
There are dozens of other words and expressions which can be used to indicate emphasis.
For example, if "We were killing ourselves laughing" is not strong enough, you can say "We were absolutely killing ourselves laughing" or "We were completely killing ourselves laughing" or "We were well and truly killing ourselves laughing" or "We've never laughed so much in our lives."
If it's really true, you can even say "We literally laughed so much it hurt" - I've actually had that happen to me a few times.
So there are any number of ways of adding emphasis. But here is the serious reason why the word "literally" should not be one of them. It is the one word in the English language - there are no precise synonyms, though "actually" comes close - which has the meaning described at the start of this post, to indicate that what is being used is not a metaphor, allegory, or exaggeration for effect. And the instant you allow it to be used as an exaggeration for effect you wreck the usefulness of the word to be clearly understood when carrying it's proper meaning.
Let me give a specific example. We sometimes use the expression "You're on fire" to indicate that someone is performing exceptionally well. That's OK as a metaphor. But the addition of the word "literally" as Sky TV commentator Jamie Redknapp once used it when he said that Wayne Rooney was "literally on fire" during a football match is completely unacceptable because that expression does have a quite different literal meaning and listeners need to be able to understand that meaning with no room for misunderstanding through alternative meanings if the real literal case actually applies.
It can really happen that someone stands too close to a heat source such as a coal or electric fire, or holds a candle too close to themselves, and their clothes or hair starts to burn. And sometimes other people are aware of it before they are. At my former church in St Albans a candle once set fire to a server's hair: the vicar displayed lightning fast reactions and quickly smothered the flames before any harm was done.
If you notice that someone's hair or clothes are burning, you want to be able to get their attention quickly so that you can put the fire out. This is the sort of situation where you don't want any risk that a warning like "You're on fire - you're literally on fire" can be misunderstood.
Allowing the word "literally" to be used for emphasis dilutes its' proper meaning and increases the risk of misunderstanding when the word is used in the correct way. Anyone who accepts such a usage as being fit for anything other than mockery is, in a real sense if not a literal one, murdering the English language.