It merely means a language that has a written form. The various Slavic languages at the time existed only as spoken languages.
This is reasonably clear from the context, and from the "literal" meaning of literate (ie relating to reading) and from general knowledge about Latin and Slavic.
Note how it contrasts the "literate language" with "Slavic languages with no written form". This kind of explicit context makes understanding in context straightforward.
Your dictionary hasn't captured this sense. Wiktionary does have it: "3. Which is used in writing (of a language or dialect)." A literate language is a language which is used in writing. A literate language is a language that is used by a literate culture.