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What is a "Conceit"?

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Dictionary.com defines “conceit” as:

noun

1.     an excessively favorable opinion of one's own ability, importance, wit, etc.

2.     something that is conceived in the mind; a thought; idea: He jotted down the conceits of his idle hours.

3.     imagination; fancy.

4.     a fancy; whim; fanciful notion.

Four definitions. The first one is very bad, and is by far the most popular. The remaining three are actually positive and good. That’s why life is hard.

I wonder if this is a similar case to “literally”. “Literally” started out meaning exactly, truthfully what it is in the technical sense. But after a number of years during which many people misused the word and said things like, “I was staning him for like, literally a million years low diff!”, we now have a new, official definition of the word (see definition #4 below).

adverb

1.     in the literal or strict sense.

2.     in a literal manner; word for word.

3.     actually; without exaggeration or inaccuracy.

4.     in effect; in substance; very nearly; virtually.

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