For me, personally, the extra step of the fictitious names and LLC is indeed to use a pen name from the get-go, as my only name with my agent and publishers. There are some security issues on my end, tangentially related to my WIP, that could result in danger to my family if my real name were known.
As a family, we're already in a confidentiality program and take some pretty hefty steps to protect our personal privacy. Anything I do, anything, that could result in publicity under my real name has consequences, and I carefully consider what level of risk I'm willing to expose us to.
I want my WIP out in the world (don't we all?). But I need to keep my family safe, and thus, I go the extra step with the legal documentation. My agent will know I'm using a pen name, and they'll know why.
If I just didn't want my friends/family/coworkers to know I was an author, I'd use a pen name online and query under my real name, as suggested earlier in this thread. But I want that extra layer of security. I don't want to put anyone else in the position of slipping up -- if they don't know my name, they can't accidentally share it.
It's overkill for most. Kinda par for the course for me.