“I literally died” has one obvious meaning when I’m talking about a meme someone posted on discord, and a different obvious meaning when I’m talking to the news about the time my heart stopped beating.
But, "I literally died" can never be misinterpreted because ghosts aren't real. "Literally" has no obvious meaning if someone says "I'm literally suffocating". Does someone need to be helped with a serious medical condition, or are they using a metaphor to describe their feelings?
What makes it annoying is that the word that got co-opted was a word that existed to make it clear that something wasn't an exaggeration or a metaphor. Yes, language requires context, but it's annoying when a word can mean two very different things, and you have to ask for context in order to interpret the word.