If I remember correctly, the build instructions for packages that require a separate build directory are something like:
tar xjf binutils-*.tar.bz2
cd binutils-x.x
mkdir ../binutils-build
cd ../binutils-build
../binutils-x.x/configure --blah --blah && make
as you can see, from the source directory, you create a build directory in the package root directory, which you cd into directly after, followed by the build, which will build the package in the current dir (binutils-build) rather than the source directory...so it does indeed use this directory right after it's created if you follow the instructions.
Hope this clears some confusion at least
Happy LFS'ing!