It is also a word that is frequently misused. It seems to pop up in common usage when what the speaker really means is "figuratively." Listen for it in conversation, and on TV, and see if you don't hear someone do this. I recently heard someone say, "he was so mad he literally exploded." I sure hope not....how messy!
Nine times out of ten, words that end in -ly are adverbs. In the example given in #2, "literally" modifies or gives more information about the verb "was mad". It answers the question "to what extent" or "how" regarding the anger felt by the subject. It functions as a place holder, really. Like the words "really" and "very," it tells about the verb but doesn't add anything as far as meaning to the sentence.
In almost all references, there is no real need for the word "literally." It serves mostly as a word of clarification, or as one that ensures a listener/reader understands what it being said is hard, concrete, and real rather than figurative. Therefore, if one says something like, "I was literally so mad that I turned red," the word literally there is, again, unnecessary. If you mean what you say, you will never find a need for literally.
1) The french word fromage literally means cheese, although there are many colloquialisms which take a different meaning.
2) If we take her post literally then we must assume she/he was trying to be serious.
3) The Washington Post literally wrote that he was a liar and a fraud, I know because I read it.
The word literally is related to the words Literature, Literal, Literate, etc. It comes from the French for book, Un Lit, and means, "exacatly what is written without interpretation, metaphor or misquotation." It is used to highlight the precise definition of the word(s) in question.