What exactly do you think figuratively means? I’ll give you a hint: it’s not “not really”. The phrase you are looking for is general intensifier or hyperbole and it’s the same as words like actually, truly, really, positively and absolutely.
It doesn’t matter what any of us think. It has been used that for literally years and the dictionary’s job is to record it. I don’t like it, but there are a lot of things I don’t like but I don’t blame the newspapers for reporting. Reporting only what your listeners want to hear leads to Fox “news”.
It is not, as the thread title says, “Literally now literally means figuratively” but rather that some dictionary now reports this fact.
Doesn’t make the Internet pedants magically correct either.
I’ve literally literally always found this gripe about English usage very annoying. If someone other than the Headless Horseman says to you that “my head literally exploded”, it’s pretty damn obvious that they are using hyperbole.
And I don’t know how to do the searches, but I’d bet some pretty small amounts that it’s been in use in that fashion for at least longer than the Internet has been around (which I blame for needless nitpicking demands that words be used only as defined in the dictionary).
Nobody ever uses “literally” to mean figuratively and the dictionary you quote is not suggesting that they do. (Mind you, “in effect: virtually” seems to me to be an absolutely terrible characterization of the well established, idiomatic, non-literal meaning of “literally”.)