It's just level 1 verification, plus you have ability to update the information too change your name and other. Some people could be fill the form with random information to bypass these and they can just update latter with real information.
Not sure where you got this information or which casinos allow this, but most casinos I’ve tried that require mandatory level-1 verification do not allow you to change your information after submission unless you contact their customer support first.
I go with @ryzaadit on this and you shouldn't even think too far on an example when the discussion is happening on Shuffle's ANN. For starts, I see nothing bad in that but the flexibility of doing things, it's just a way the casino can relax the strictness of the KYC on first verification, after all, many would have wanted a no-KYC, so if the level 1 verification can still offer the flexibility, why not? I have seen a few casinos that allow that as stated by @ryzaaditside aside from Shuffle and I see no big deal in that. Document submission which starts from verification 2 is where the true KYC starts, V1 can be changed.
But asking you, personally, as a user of a casino that allows that "flexibility" - Why would you use a different/fake name instead of using your real name?
¯\_(ツ)_/¯
I believe it's probably better to leave the form blank, if the casino allows that, than filling it with a fake name. Plus if you don't trust the service with your name, then it's probably not the place for you.