Nail on the head, especially with the simplification of books. Being able to "read the words" is completely different to understanding the meaning, even in plain writing rather then hidden meanings or nuance etc.
It's why so many adults can "read the words" on a formal letter from, say, a bank, but havn't a clue what it actually means.
It can be extended to numerical literacy, i.e. those who can read the words/figures on a bank statement or bill, but not actually comprehend what those words/figures actually mean.
Until you come across people who are seemingly numerate and literate superficially at least and then realise that they don't actually know what information is actually on a bank statement, i.e. monies in and out and balance, then you don't really appreciate the problem. Same with people who can't actually make sense of a bus or train timetable - they can see the table, the times, the places, but just havn't a clue how to comprehend what it actually means. These are people who appear completely "normal" in real life and who you wouldn't think would have such problems, but there's a complete lack of understanding/comprehension.
I've always thought the 11+ exam was a pretty good marker of functional literacy and numeracy, and that's set for 10 year olds! It's very highly based on actual understanding and comprehension, logic, etc.
I think schools have really dropped the ball. "Comprehension" these days is all about fiction, poems, etc. Go back a few decades and a "comprehension" in English language could have been set on a recipe, or an appliance instruction booklet, etc., i.e. real life relevant and factual. Same with maths, yes, compound interest is "taught" as part of GCSE, but it's all theoretical and equation based - it's not taught in simplistic and accessible terms in a way that it's understandable by the lower half of the cohort.