You’ve indirectly highlighted the biggest issue I have with referring to literacy as “x-grade reading levels”.

There are standards of complexity that are set by grade level.

Here's a resource with a great breakdown

https://www.weareteachers.com/reading-levels/#:~:text=Lexile%C2%AE%20Reading%20Levels&text=The%20first%20digit%20of%20the,above%20your%20child's%20current%20score.

Combines these with reading standards for various grades, and the metric makes a lot of sense. To say someone reads at a 5th grade level means they are technically literate but struggle to find true meaning, subtle concepts, and likely have a limited vocabulary.

Well that sounds like semantics that you take exception with, on how particular educational groups define things. Your frustration is well founded but misplaced on me. Indeed all things build and in different orders for different people no doubt. However, in the context of educational reporting at the government level, these are the labels that are applied in the various reports. And as all things, those things roll down hill.

clearer distinctions for these types of skills that meant more than “x-grade”

There are, but politics being what they are, those labels are less meaningful labels to folks that arguably have the most power to change the course of things (that last part is strictly my opinion, sorry/not really sorry I injected it here). In short, I concur with your observation.