- It's not going to stop anyone who is determined enough to read "adult" content from reading it, regardless of age. Kids can and will lie about their age on the internet given circumstances that will allow them to do so.
- For this reason, it's not a substitute for people who have kids who are on the internet actually supervising said kids (in amounts reasonable to said kids).
- It is a pretty good CYA for LJ, in that if a parent complains about a kid having read sketchy content on LJ, LJ can say "Um, that was clearly marked as adults-only, and it's not our fault if your supervision of your kid is bad enough that your child can lie about their age on the internet."
- It is a far better protection for users than previous methods if content was complained about.
I do not have internal experience with issues involving content complaint, as I have never been a member of the Abuse Prevention Team and probably couldn't discuss stuff like this if I had, but I have observed multiple people talking about issues like this, and it seems that previously if content was complained about, LJ's recourse was to advise the journal owner that either the entry needed locking or removing, or else the journal would be suspended.
Now, questionable content can remain public to anyone whose journal settings allow them to view adult content, without threats about "lock it or we take the entirety of your journal down". (I see in news that single-entry suspension is also coming, but that's way new.)
In summary: Yes, censorship on the internet does bite donkey balls. However, if you're large enough or smutty enough to have annoyed jackasses with lawyers coming after you, what exactly are your other options?