From Merriam Webster:

Can literally mean figuratively?

One of the definitions of literally that we provide is "in effect; virtually—used in an exaggerated way to emphasize a statement or description that is not literally true or possible." Some find this objectionable on the grounds that it is not the primary meaning of the word, which we define as "in a way that uses the ordinary or primary meaning of a term or expression." However, this extended definition of literally is commonly used, and its meaning is not quite identical to that of figuratively ("with a meaning that is metaphorical rather than literal").

Is the extended use of literally new?

The "in effect; virtually" meaning of literally is not new. It has been in regular use since the 18th century and may be found in the writings of some of the most highly regarded writers of the 19th and early 20th centuries, including Charles Dickens, Mark Twain, Charlotte Brontë, and James Joyce.