I guess it DOES have some benefit, huh?
People misunderstand what "security through obscurity" means. Most (all?) encryption relies on security through obscurity at some level.
Hiding your house key under a loose floorboard in your back deck is the kind of security through obscurity that can really work, assuming that there are no other clues that lead to the hiding place. However, hiding the prybar that you use to pry up the floorboard under the belief that hiding the method of access makes your key safer is not the kind of obscurity that works because if the attacker can find your hiding place, he can figure another way to get to the key.
Similarly, hiding or not writing down your password is security through obscurity that works. But trying to hide the implementation details of your cipher algorithm does not, because cryptoanalysis can break your encryption even without access to your encryption algorithm.
So, obscuring your real password among an endless number of fake passwords is the kind of obscurity that can work -- even if the attacker knows that your password is somewhere among the billions of fake ones, unless he has some clue to tell him what your real password looks like, just knowing that fakes are there doesn't help him.
Of course, they could use the prybar to simply break a window, or pry open the door, invalidating the purpose of the hiding place entirely. So hiding the prybar, while it doesn't directly affect the hiding space, helps increase overall security of the system.