To be honest, I'm not sure the answer to this question. It seems like a term with endless definitions.
So far, it seems to me that media literacy isn't entirely any one thing. It cannot be defined as creating media works nor can it be defined as critiquing media pieces. It's something of a combination of the two. To be media literate, one must access, evaluate, question, create and interact with media in a variety of forms.
Media literacy is crucial to the 21st Century learner and as such has been made a cross curricular aspect of education.
Teaching media literacy is teaching an approach. It's informing students, giving them the tools to be skeptical, critical thinkers. It is providing them with the opportunities to explore media. It is handing them a framework.
I could entirely change my mind. But I think that's part of the fun. This is how I see media literacy now