The problem with this degraded literalism is that context and language gets stripped away. In this literalism we start making connections or points that were not intended by the author (or miss the connections that were intended). We forget the poetry and nuance in language and try to read it all in our post-enlightenment mindset. So the story of Adam and Eve becomes simply a story of "what happened in the beginning" losing the sense of God's purpose in our world. Or we see Jesus' words in Mark 13 applying to only the end times when Jesus was referencing the ancient fall of Babylon and the future fall of Jesus.
Bad literalism gets us into awkward places, contorting our theology and thought. True literalism helps us experience the Bible in all it's glory and craziness.