LOS for a freeway section depends on the density that is "pc/mi/ln".
Density = Vp/S, where S is FFS.
As FFS decreases density increases and so LOS deteriorates. Think of it this way, as there is lot of weaving going around the cars can't sustain the speed and have to slow down. So in a given one mile section you will now have more # of cars per lane than if there was no slowing down. This translates to bad LOS.
I hope I answered your questions.