This study examines the relationship between parental interactions, digital media usage, and health literacy among 19,386 elementary students (ages 6–11) in Guangdong Province, China, using the framework of parental mediation theory. Path analysis revealed that increased digital media usage is associated with decreased health literacy, particularly for short video platforms, which exhibit a significant negative correlation (β = −.335). Parental interaction was found to significantly reduce the use of instant messaging apps (β = −.007) and short video platforms (β = −.008), with the influence being moderated by the student’s residence status (boarding or non-boarding). The findings highlight the importance of frequent parental interaction in limiting digital media usage and enhancing health literacy among children. This study suggests that parental mediation theory should pay closer attention to environmental or living status factors, as they can significantly influence its mechanisms of action. Overall, this research contributes to the discourse on digital behavior in childhood and offers evidence-based insights for improving educational and health literacy strategies.