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In the 21st century, digital literacy has emerged as an indispensable necessity, driven by the rapid advancements of digital technology across almost every sphere—including education, the workplace, and communication. Far from being limited solely to technical proficiency, digital literacy encompasses cognitive, social, and ethical competencies essential for effective participation within a digital environment. In this era of transformative technological change, "skill mapping" serves as a systematic methodology for identifying, organising, and aligning individual competencies with digital requirements; consequently, the role of skill mapping in fostering digital literacy is undeniable, even if a degree of theoretical ambiguity regarding the concept persists. This study employs qualitative and theoretical approaches to conduct a comprehensive literature review regarding skill mapping and digital competencies. It draws upon various key theoretical frameworks—including constructivism, human capital theory, connectivism, and competency-based education—to examine their relevance in fostering the development of digital skills. Furthermore, utilising a critical analytical perspective, the study evaluates the strengths and limitations of these frameworks. The research findings indicate that skill mapping plays a pivotal role in identifying deficits in digital competencies, supporting learner-centric personalised education systems, and aligning skills with the demands of the industry sector. It also facilitates competency-based learning and continuous assessment. However, the analysis also reveals several limitations, such as the challenge of translating complex skills into measurable units and the difficulty of adapting to a rapidly evolving digital landscape. Furthermore, the social, emotional, and ethical dimensions of digital skills are often not sufficiently present. The study concludes that the implementation of a flexible and context-sensitive framework serves as an effective means for mapping digital skills development. Its success hinges upon the integration of theoretical concepts with practical application, as well as considerations regarding inclusivity and accessibility. Future research should prioritise the development of localised and dynamic models that incorporate emerging digital skills and foster holistic skills development.