There is also quite a difference between being able to type out and read short messages to friends like "who wants to go to the park today" or read a menu and know if a sandwich has mustard on it or not and being able to have deeper inferential and evaluative understandings of written thoughts and ideas.

I think back to some college peers who even in some more basic classes could clearly read the words of the assigned writings, they couldn't then parse out the deeper meanings behind the assignments. They weren't illiterate, you could ask them to read a passage, and they'd be able to say all the words. You could ask them face value questions about the text, and they'd probably be able to answer most questions right. But any deeper analysis was just beyond them. So, when the professor would ask deeper questions, they'd say "I don't know where he's getting this, the book didn't talk about that at all".

Agree, but I'm not sure how much worse this is today?

I avoided English Lit in college but thinking back to High School I recognize the "I don't know where he's getting this" reaction. I just rarely engaged with the so-called "classic" stuff we had to read, and like you say I had no trouble reading the words but struggled with deeper meanings or even just getting past the archaic language. And this was in the early 1980s, no chance it was influenced by social media or mobile phones or AI. My parents probably blamed television.

At least we now have AI, where a student could (if motivated) ask questions about the meaning of a passage and get back a synthesis of what other people have written about it. Back then I used Cliffs Notes to do that.