What the *%$#^! is "literary fiction"?

Come on.  You can't tell me I'm the only one who's fed up with this bizarre little term, which, to be honest, I never even encountered until I started going to writing conferences and reading writing blogs and following writer's chat groups.  Isn't it a little redundant?  According to my big fat Webster's Dictionary, "literary" means bookish or related to learning or books or literature.  Um - isn't that inherent in the term "fiction"???  When did we decide to use this to describe a special subset of fiction?

If Google, the 21st century's lazy woman's research tool, is right, the term started being used in the '60's some time.  Figures.  (Oops!  Did I say that out loud?).  But I'd swear the widespread use among agents and editors is a later development.  At any rate, I'm really developing a dislike for it.  At times it seems to imply that "other" fiction (sometimes called "genre fiction" or "popular fiction" or "commercial fiction") is  NOT literary - that it's for simpletons, that it's less educated or complex or nuanced.  On the other hand, sometimes "literary fiction" is code for "stuff that won't sell" or "dull and plotless".

There's no lack of efforts to explain and define this term.  Nathan Bransford has a nice, succinct one on his blog:  "In commercial fiction the plot tends to happen above the surface and in literary fiction the plot tends to happen beneath the surface."  He also makes a decent case for the concept, and puts up a good defense of what quality literary fiction ought to be.  Still, I can't help feeling like this term can cause nothing but trouble, heartache and bad writing.

The best of "literary fiction" pays intense attention to detail, and finds breathtakingly perfect ways to describe small nuanced moments while tracing the arc of a character's internal journey.  The best of "commercial fiction" pulls you along with strong plot elements and pacing.  My question is, shouldn't the best of ANY fiction have all of the above?  Achingly spot-on description, meaty nuanced character development, layered thematic arcs, gripping plot, strong pacing.  I want it all!

I guess that's why I don't get the whole need for a term like "literary fiction."  It just rubs me the wrong way.  It makes my shrill, opinionated, loudmouthed self absolutely insist on coming out to play.  Thanks for putting up with her.  I shall now return to my more level-headed, conciliatory persona, who will dutifully look at all sides and recognize the value of a variety of perspectives.  Let the comments commence!  

(Today's blogpost is brought to you by an evening of reading literary fiction magazines while drinking coffee at Portland's Press Club eatery.)