I remember trying to explain this to a friend once, but was having a 'senior moment' and couldn't remember the word 'figuratively' to explain what 'literally' should have been in the context. Now it is used as an intensifier, but it seems to be 'sarcastic' when used in that way... there's some understanding that exaggeration is being used, and that the use of the word 'literal' isn't entirely correct.

It might be more precise to call it hyperbole than sarcasm. But either is pretty reasonable. Both are rhetorical devices that hinge on creating an effect by intentionally using a word differently than its normal, plain meaning.

Incidentally, I think one reason people get irritated by this is that some people prefer communication to be direct, unambiguous, and straightforward without relying on a lot of subtlety, context, guessing, or interpretation. I'd bet that programmers and other technically-minded people lean this direction more. So when people complain that this sort of thing is a violation of the rules, I think on some level they know that's not true, so I'm inclined to interpret it more like a plea or protest to avoid this style of indirect communication.