From what I understand, if we solder the LBO pin to the battery,...
Do not solder this pin to the battery. It will not work anymore if you do that.
By default it is pulled up to the battery voltage by a weak pullup resistor. When the battery voltage falls below 3.2v, the charger will pull this pin to GND. You can connect this to a GPIO pin on your processor to detect when the battery is low.