Well, yeah that's why I have trouble with it. At least in Mandarin Chinese, which I have experience with, I've seen people describing themselves as 'fluent' when in reality they are either (a) lying or (b) meaning that they can speak conversationally.

My real world rule of thumb is that if I wrote "Fluent in Mandarin" on my CV, but then in the interview I couldn't read or write decent responses to emails or something like that, then most people wouldn't consider that as fluent (despite the dictionary definition).