{literal} tags allow a block of data to be taken literally. This is typically used around Javascript or stylesheet blocks where {curly braces} would interfere with the template delimiter syntax. Anything within {literal}{/literal} tags is not interpreted, but displayed as-is. If you need template tags embedded in a {literal} block, consider using {ldelim}{rdelim} to escape the individual delimiters instead.
Example 7-27. Some css style in a template
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See also {ldelim} {rdelim} and the escaping Smarty parsing page.