Literate programming means the flow of the code follows the flow of the thought process: you write the story, and insert code where relevant. It includes other bits of code as macros.

From that Wikipedia page:

The literate programming paradigm, as conceived by Knuth, represents a move away from writing programs in the manner and order imposed by the computer, and instead enables programmers to develop programs in the order demanded by the logic and flow of their thoughts.[2]

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Order of human logic, not that of the compiler

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Instead of comments provided as side notes to source code a literate program contains the explanation of concepts on each level, with lower level concepts deferred to their appropriate place, which allows for better communication of thought.

Example (same page):

    The purpose of wc is to count lines, words, and/or characters in a list of files. The
    number of lines in a file is ......../more explanations/
    
    Here, then, is an overview of the file wc.c that is defined by the noweb program wc.nw:
        <<*>>=
        <<Header files to include>>
        <<Definitions>>
        <<Global variables>>
        <<Functions>>
        <<The main program>>
        @
    
    We must include the standard I/O definitions, since we want to send formatted output
    to stdout and stderr.
        <<Header files to include>>=
        #include <stdio.h>
        @