I don't believe this technical illiteracy is limited to "old" people. I think these problems are often associated with being older, but they're not exclusive to that group.
I work with rural technology companies for a living, and, anecdotally, I also observe similar problems with those who simply have a more limited exposure to technology...like those in rural areas.
Let's take my 55-year-old mother, for example. She lives in rural Pennsylvania, and I'd hardly call her "old." She worked with computers for a very a long time until her early retirement a few years ago. Every once and a while, she will show me a thing or two you can do in the Microsoft Office suite that I didn't know about... and I used to teach those programs to annoying college freshmen! So I'd call her above average as far as technology literacy goes. But when it came to figuring out her new smartphone, she was absolutely baffled. I have a few theories as to why smartphones were tough for her to pick up.
New Interface: When compared to a desktop, the interface for a smartphone is almost completely alien. Gone is the idea of pressing a "Start" button and finding what you need in the "Programs" menu. Accessing your files is a great deal different (less of a problem in Android compared to iOS, but it's still not that simple). Adding a new program (an app) doesn't involve using a CD or a floppy disk. Instead it's done through something called the App Store or Google Play. Despite her more than 20 years (or more) or experience in computing technology, none of it had prepared her for the complete change in gears that was needed to use a smartphone. It was all new.
Smartphones Became Available "Overnight": The iPhone, arguably the first major, successful smartphone, became available in 2007. That was only seven years ago. My mom retired right around 2010. The only people who really had smartphones in those early days were people with too much money or gadget nerds. So she missed out on a lot of the "early days" of using smartphones. The rest of us had a few more years practice on them before she got her first one.
New Technology Usually Excludes Rural Consumers: This is especially true when technologies are first beginning to mature. In 2007, even if my mom bought the very first iPhone, she lived well outside the cellular service territory to receive decent 3G signal. Effectively, she had to wait for the technology to expand and become available everywhere. And by the time it was available, she was already behind the curve.
So in the case of the old person with the remote control, they've probably had the same ancient television since someone from Montgomery Wards wheeled it into their living room in 1971. It's worked exactly the same way since the day it came in: turn this dial to do X, turn this dial to do Y. 40+ years on, the new TV rolls in, and now they're 40 years behind on how the new stuff works. What's an input? Why are there so many "modes" for things? There are no buttons on the TV itself, how do I turn it on. They're all easily answered questions, but to someone who "topped out" on TV technology in the 70s, the new stuff can be intimidating. Hell, every once and a while, even I manage to turn on the Spanish mode and it takes me a minute to figure it out.
As an aside, I'd like to say one thing: new ways of thinking are difficult for everyone, not just old people. It's easy to jump on the "old dogs can't learn new tricks" bandwagon, but that's simply not the case. Sure, there is such a thing as cognitive decline, and it usually does take older people longer to learn new things. But this doesn't mean that old people don't want to learn new things or that they can't.