'Health literacy' refers to accessing, understanding and using information to make health decisions. However, despite its introduction into the World Health Organization's Health Promotion Glossary, the term remains a confusing concept. We consider various definitions and measurements of health literacy in the international and Australian literature, and discuss the distinction between the broader concept of 'health literacy' (applicable to everyday life) and 'medical literacy' (related to individuals as patients within health care settings). We highlight the importance of health literacy in relation to the health promotion and preventive health agenda. Because health literacy involves knowledge, motivation and activation, it is a complex thing to measure and to influence. The development of health literacy policies will be facilitated by better evidence on the extent, patterns and impact of low health literacy, and what might be involved in improving it. However, the current lack of consensus of definitions and measurement of health literacy will first need to be overcome.