Examples

Example 1

We literally had to hide all of our breakfast cereal in the fridge to keep our cat from hunting it down, breaking open the box, and eating it.

Maybe it has something to do with that tiger on the box. Literally is used correctly in this sentence because hiding the cereal in the fridge actually happened.

Example 2

My twin sister is my best friend. I've literally known her my entire life.

In this example, literally is used correctly because the speaker and her twin go way back. As in all the way back.

Example 3

When Kel was on summer vacation, he literally ate pizza for lunch everyday.

We'll bet Kel's back to school shopping included literally buying all new pants. Assuming that Kel's being honest here, and he did eat pizza everyday, then literally is used correctly here.