What caused the shift from the early medieval court where noble literacy was nonexistent or merely functional and scorned as the arena of clerks, to the post-Renaissance courts of rulers such as Elizabeth I, where courtiers and powerful nobles were praised for their poetry and song-writing?

Largely it had to do with administration and law. Taking England for an example, we see a major change between the reigns of Henry I (named “Beauclerc” because he was actually literate) and Henry II. (I.E, between 1100-1189)

Henry I either created the Exchequer or massively reformed it, so that you now had an audtiting system whereby the Exchequer sent written summons to the sheriffs and other royal officials, requiring them to send accounts for their shire as to tax collection, incomes from royal lands, etc. Now, if you want to be a Sheriff of your shire (which is kind of big deal for your local nobility), or you’re a taxpayer, or you rent land from the king or owe the king money, you need to be able to read when the tax man starts writing to you…

Henry II’s legal reforms massively expanded the system of bailiffs, sheriffs, justices, and courts, all of whom had to send written reports, read royal writs and warrants, and keep written records. Now if you want to get a judicial office (which is also super-important for your local nobility), or if you need to go to court over a land dispute, or if you get sued by somebody, you need to be able to read. 

It also helped that following the killing of Thomas Becket, Henry II agreed to the Compromise of Avranches, which allowed people to claim “benefit of clergy” and be tried by the more lenient ecclasiastical courts, but only if you could prove your literacy by reading Psalm 51.

The net result of these changes was that reading became a lot more important – now reading is no longer the province of clerks and other servants (although yes, the clergy had always had a much stronger impetus to be literate, so younger sons of the nobility would be more likely to be literate, etc.) but the path to royal favor and political prominance. 

It also helps that in a medieval society, the monarch is a very strong influence on fashion, extending from their person to their court and from their court to everyone who would really like to be part of the court. So when the Kings of England began to be literate starting with Henry Beauclerc, you can’t really get away with saying that reading is for nerds, because that’s lese majeste.

Now, this kicks even more with the Renaissance, where the cultural ideals shift. Now it’s not enough to be a knight holding up the best ideals of chivalry and courtly love, if you want to be fashionable, you need to fit Castiglione’s ideal of the courtier – which literally wrote the book on how to be a “Renaissance Man.” In addition to being athletic and a good soldier, you also had to be genteel in your manners, have a good voice, show good comportment, to be trained in the humanities, classics, and fine arts, and in all of these things, to do them with sprezzatura – i.e, with “nonchelance,” “careful negligence” and “effortlessness and ease.”

In other words, Castilgione invented the idea of being cool.