Yes, it is very common to use exaggerations in Chinese and when a certain exaggeration is widely accepted, its figurative meaning took over its literal character-by-character meaning. So when the idiom is used, the four characters are interpreted as one word that describes its figurative meaning.
Let me give you an example: in ancient Chinese it is a standard greeting to wish the emperor to live ten thousand years, literally. But everyone understands that it just means very long life.