[dllthomas]

e.g. Merriam Webster (http://www.merriam-webster.com/dictionary/literally):

    1 :  in a literal sense or manner :  actually <took the remark literally> <was literally insane>

    2 :  in effect :  virtually <will literally turn the world upside down to combat cruelty or injustice — Norman Cousins>

For what it's worth, I think they've got it wrong. In my experience, no one uses the word to convey that it was "in effect" - that would be equally understood if the word was omitted. Including, very much, the example of usage they gave. I would say what is going on is that the word is still being used in sense 1, but being used hyperbolically.

We don't say that "miles" has a separate meaning of "a few hundred feet" when someone says "I've walked miles through this store looking for you".