literacy (plural literacies)

1. the ability to read
2. understanding of something (ex. computer literacy)

http://en.wiktionary.org/wiki/literacy

Functional illiteracy is a term used to describe reading and writing skills that are inadequate to cope with the demands of everyday life. This is contrasted with illiteracy in the strict sense, meaning the inability to read or write simple sentences in any language.

http://en.wikipedia.org/wiki/Functional_illiteracy

Critical literacy is an instructional approach that advocates the adoption of critical perspectives toward text. Critical literacy encourages readers to actively analyze texts and it offers strategies for uncovering underlying messages. There are several different theoretical perspectives on critical literacy that have produced different pedagogical approaches to teaching and learning. All of these approaches share the basic premise that literacy requires the literate consumers of text to adopt a critical and questioning approach. According to proponents of critical literacy, it is not simply a means of attaining literacy in the sense of improving the ability to decode words, syntax, etc. In fact, the ability to read words on paper is not necessarily required in order to engage in a critical discussion of "texts," which can include television, movies, web pages, music, art and other means of expression. The important thing is being able to have a discussion with others about the different meanings a text might have and teaching the potentially critically-literate learner how to think flexibly about it.

http://en.wikipedia.org/wiki/Critical_literacy#Definitions