I'm not going to talk about how prevalent or not the fictional author is because I haven't really noticed. It is something I've done, several times. My fictional authors are Nicholas Blake, a nineteenth century spec-fic writer (since sci-fi as a genre hadn't been named); Jake de Winter, a contemporary fantasy writer, and Deirdre Valentine, a romance writer (though that's a pseudonym. Those who followed After Dark know what I mean!)
I don't know if it follows from "write what you know" or not. What I have done, is once created, I tend to refer to them in other works. For instance, both Blake and de Winter were mentioned in After Dark (Deirdre's story). And I've got titles for them and even blurbs for some of them. I mean, Jake de Winter's book came true as he wrote it....
I'm assuming that since I've done this, other people have, too. I know I've read at least one book by another author who had a writer as a character. So have any of us ever wrote their books?
I was just thinking about an idea for this year's NaNo. I know it's quite some months before November, but from previous experience, it's best for me to have an idea in advance so I can research and/or world build, otherwise, I spend too much time in November trying to figure out how stuff works. My plot bunny file is thick with ideas, but none are screaming "WRITE ME!" and I found myself thinking about my fictional writers, and their non-existent books.
I'm thinking of trying to write one of Blake's books. The blurb I wrote for The Mechanism sounds quite exciting, and I'd actually like to read the book. Can't do that unless I write it, first!
Meanwhile, back to editing my current work...