Literacy understanding refers to the process of students learning the skills of language to enable them to improve learning and communicating in the activities at school and outside school. Students acquire knowledge, talents and inclination not only to interpret language but also to use it effectively. Literacy pertains to the learners in the activities of listening, speaking, reading, writing and the ability to create variety of texts orally, visually in print or digital medium. Therefore, literacy understanding can be explained as acquiring the skills to process the understanding of language components and using the same effectively for several purposes in variety of contexts. Literacy understanding can be developed and improved by studying English language in all the available forms and evaluating the writers’ ideas, intent and bias in different contexts so that the learner could successfully choose their own language to communicate in any form. Above all, learners employ their acquired literacy capacity to interpret other writers and thus create their own texts in speaking, printing and other type of texts on a wide range of functions. In other words, students learn types of creative texts like, prose, poetry, drama and fiction by other writers and use their knowledge to create their own texts for all purposes.