meaning - Literally vs. figuratively: how literally is literally?

I'm sensitive to the fact that in light of recent events, the example discussed in this question may be unsettling to some. For that, I apologize, but I cannot think of an effective alternative.

In a Modern Marvels documentary on The History Channel, the narrator says, "[...] bombs have evolved into devices that can literally blow mankind off the face of the earth."

It's difficult to tell whether "literally" is appropriate in this instance. On one hand, the narrator likely uses the word literally to emphasize that although it may have been common for many years to talk about bombs as being powerful enough to blow up the world, in the modern age of weaponized hydrogen fusion it really is possible to eradicate all of mankind. On the other hand, bombs don't blow people "off" the planet, they merely destroy them and leave their scattered remains.

With that in mind, my general question is this: when using the word literally, is it important that every word or phrase be meant to take on its most technically literal interpretation? Or is it enough that there exist two, reasonable, alternative interpretations of the sentence, one of which is a more literal rendering, and that the more literal of the two is intended?