Definition - To use words in their natural or customary meaning.

1. As opposed to using them as figures of speech.

Example -

(1) Neil Armstrong has been to the moon and back. (literal)
(2) Last night I danced myself to the moon and back. (figurative, sappy)

Etymology -
The term first pertained to interpretting the "letter" of Scripture, i.e. reading the words of the Bible for their customary as opposed to their allegorical or metaphorical meanings. It derives via Old French from the Late Latin literalis, of or belonging to letters or writing (from the Latin litera, letter).

Oxford English Dictionary -
Its first citation in this sense is from 1382:
"Holy scripture hath iiij [sic] vndirstondingis; literal, allegorik, moral, and anagogik."
(Wyclif Prol. 43)

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