Some people know this word and some people think it's a made up one.
Im going to take a guess and assume the people who know what the word means is because they are doing it.
And the people who do not don't need to know what it means, is because it doesn't apply to them.
Here's an example of how to use the word- I'm living vicariously through your life experiences.-
In a nutshell, the word means that you are living your life through stories of another. You don't have the life you want to live; so you're having more joy hearing of other people's tales than your own.
So if someone says that, obviously they aren't happy with their life. They don't like the way it's going. And most of the time, it's out of their control. So don't mock someone for having a big vocabulary, because with personal experience, we live through books vicariously as well. It's an escape, so that's all we do. we read and we learn.