When it comes to most “normie” use cases in Linux (and I am including the self hosting community here as well), people prefer working on well established and supported distributions such as Debian, Ubuntu, CentOS, Fedora, etc.
Generally, people would discourage the use of bleeding edge distributions like Arch, Gentoo, etc. as it might break something if the user doesn’t know what they’re doing. Yet, I have seen instances where this has been used by hobbyists and companies. (ChromeOS is a Gentoo corruption, and SteamOS is an arch derivative).
What about Linux from Scratch (LFS)? Under what circumstances would one want to build Linux from the ground up for production or commercial purposes?
Mainly when you are building a single-purpose , “appliance” device and you have the bare minimum of RAM/storage available. You just want to get the board powered up and initialised and then jump to your application.
So you build a kernel with only the correct drivers you need, you skip initrd, you skip initscripts and (lord forbid) systemd, you just jump straight to your program, with possibly busybox available if you need debugging.
Edit: I’m talking more about building it from scratch here, not LFS. Regarding security issues, you then “only” have to deal with kernel exploits, with a limited surface as you have limited modules linked, and exploits in your application.