Literacy is traditionally defined as the ability to read and write. In the modern world, this is one way of interpreting literacy. A more broad interpretation is literacy as knowledge and competence in a specific area. The concept of literacy has evolved in meaning. The modern term's meaning has been expanded to include the ability to use language, numbers, images, computers, and other basic means to understand, communicate, gain useful knowledge, solve mathematical problems and use the dominant symbol systems of a culture.The concept of literacy is expanding across OECD countries to include skills to access knowledge through technology and ability to assess complex contexts.A person who travels and resides in a foreign country but is unable to read or write in the language of the host country would also be regarded by the locals as illiterate.

The key to literacy is reading development, a progression of skills that begins with the ability to understand spoken words and decode written words, and culminates in the deep understanding of text. Reading development involves a range of complex language underpinnings including awareness of speech sounds (phonology), spelling patterns (orthography), word meaning (semantics), grammar (syntax) and patterns of word formation (morphology), all of which provide a necessary platform for reading fluency and comprehension.

Once these skills are acquired, the reader can attain full language literacy, which includes the abilities to apply to printed material critical analysis, inference and synthesis; to write with accuracy and coherence; and to use information and insights from text as the basis for informed decisions and creative thought. The inability to do so is called illiteracy or analphabetism.

The United Nations Educational, Scientific and Cultural Organization (UNESCO) defines literacy as the "ability to identify, understand, interpret, create, communicate and compute, using printed and written materials associated with varying contexts. Literacy involves a continuum of learning in enabling individuals to achieve their goals, to develop their knowledge and potential, and to participate fully in their community and wider society"