There are entire forums for this, ie osdev http://wiki.osdev.org/Expanded_Main_Page
There are entire books for this http://www.amazon.com/s/ref=sr_ex_n_1?rh=n%3A283155%2Cn%3A5%... amazon lists about 57,000 results for operating systems books
You will get out of LFS what you put into it. It tells you how to download the source, extract and install it. When you have the source, nothing is preventing you from looking at it.
I also take issue with "how can we hope to continue developing and innovating on the OS level when it’s practically impossible to figure out what anything does or how it works."
There are general concepts that you will learn from getting a book on os development (including the kernel) and writing a minimal kernel yourself will give you insights into the work that goes into a full kernel such as the linux one. The concepts, not the specifics are what you need to learn, and you do this through theory, you pick up the rest from implementation (but starting with a kernel, half of the os is already developed fof you).