Allegorical Hermeneutics seeks to understanding the Scriptural text in a symbolic manner. It is often used to interpret various prophetic passages.
Revelation 12 is an excellent example of how allegorical hermeneutics is used. It is the first place in the New Testament where a dragon is mentioned. This 'dragon' ultimately wars against God's holy angels. Rather than referring to a literal animal battling the righteous angelic host, the dragon in passages like verse 7 is symbolic of Satan (a belief that is confirmed in verse 9).
And there was war in heaven; Michael and his angels warred against the dragon, and the dragon and his angels warred . . . And the great dragon was cast out, the ancient serpent who is called the Devil and Satan, who is deceiving the whole world . . . (Revelation 12:7, 9).
Literal Hermeneutics attempts to grasp the plain or straightforward meaning of the text. An example of Scriptures which are best understood literally include those which discuss the coming of the Messiah, like those below which mention his birth in Bethlehem to a virgin.
"And you, Bethlehem Ephrathah, you being least among the thousands of Judah, out of you He shall come forth to Me, that is to become Ruler in Israel. He Whose goings forth have been from of old, from the days of eternity." (Micah 5:2, HBFV)
Therefore, the LORD Himself shall give you a sign. Behold, the virgin shall conceive and bring forth a son, and they shall call His name Immanuel (Isaiah 7:14)
Hermeneutics, which is defined as semi-allegorical or semi-literal, uses a mixture of both the above methods.