You are correct, "...multiple factor authentication is to not only test WHAT YOU KNOW (password, passphrase, security question) but also to test WHO YOU ARE or WHAT YOU HAVE. The former is biometric data, the latter would be tokens like a rsa keyfob or a card to swipe or an rfid tag..."
Also, "...Any security product that doesn't even KNOW what two factor authentication is..... man. You should steer clear of any of their products."
LastPass does multiple factor authentication. I am sorry that I was not more clear.
For upgrade members, they offer something called Sesame. See http://helpdesk.lastpass.com/security-options/sesame-multifactor-authentication-with-a-usb-thumb-drive/
Sesame will allow you to use a USB (something you have) with your Login Information (i.e., your user ID and Password). Your Login Information (as you know) is something you know.
Upgraded members could also use YubiKey (something you have). Yubikey is a special USB. See http://www.yubico.com/yubikey
for details. The Yubikey has to be used with your Login Information (something you know) to access your account.
Basic members can only use something called Grid. LastPast will produce a Grid for you to print out. A Grid (something you have*) is a list of random numbers. After you put in your Login Information (something you know), LastPass will ask to to look up certain places on the Grid and tell you what you find. Input the wrong thing and no access. More information is at http://helpdesk.lastpass.com/?s=grid
Upgrade members can also use Grid. However, I don't know why they would. A piece of paper is easier to lose then a USB (my opinion).
LastPass (I believe) will only allow you to use one type of multiple factor at a time. So you can not use your USB, Login Information and Grid. You can have a max of only two types of authentication. Granted using a USB, Login Information, and Grid is only two types** of authentication. However I think I have made my point.
The links about Sesame, YubiKey, and Grid have videos.
* I guess you could remember the Grid (I would not take the effort to try), however I would still consider that something you have (i.e., your mind
** Login Information is something you know. A USB and Grid is something you have.