To perform a local orbital analysis of electronic and magnetic interactions, we construct the Wannier functions (WFs) of the Fe $3d$ orbitals in the parent compound of the recently discovered iron pnictide superconductors, LaFeAsO, and a comparison material LaFePO. Comparing the WFs for the stripe antiferromagnetic order with those for no magnetic order, the difference is a significant spreading (``{\it de}localization'') of specifically the $d_{xy}$ and $d_{xz}$ (but not $d_{yz}$) WFs, where parallel Fe spins lie along the $x$ direction. The WF basis gives a tight-binding representation of the first principles, density functional based Fe-derived bands. Comparing hopping parameters, it is found that changes due to stripe antiferromagnetism, even if it is weak, enables more isotropic hopping involving spin-majority electrons in the Fe $3d_{xz}$ (but not the $3d_{yz}$) orbital. This change, counterintuitively, actually reinforces electronic anisotropy. Further insight is gained by comparing the WFs of LaFeAsO and LaFePO, identifying how the difference in WFs is related to the difference in hopping integrals and showing how the pnictide atom is influential in forming the stripe antiferromagnetism. Kinetic energy considerations suggest that orbital fluctuation, in addition to spin fluctuation, may contribute to the decrease in observed ordered moment compared to the calculated values.