Without seeing example scripts and knowing the context, LFS=<value> is simply a variable. I do not see, at least from your description, that it is a 'system environment' (I guess you mean an exported environment variable?).
If you are seeing it in shell scripts, it may be that those shell scripts are being borrowed from LinuxFromScratch. One does tend to see a lot of cross-pollination in the Free Software world, so I wouldn't be surprised.
Maybe an example would help nail it down.