In many sensory systems, transmembrane receptors are spatially organized in large clusters. Such arrangement may facilitate signal amplification and the integration of multiple stimuli. However, this organization likely also affects the kinetics of signaling since the cytoplasmic enzymes that modulate the activity of the receptors must localize to the cluster prior to receptor modification. Here we examine how these spatial considerations shape signaling dynamics at rest and in response to stimuli. As a model system, we use the chemotaxis pathway of Escherichia coli, a canonical system for the study of how organisms sense, respond, and adapt to environmental stimuli. In bacterial chemotaxis, adaptation is mediated by two enzymes that localize to the clustered receptors and modulate their activity through methylation-demethylation. Using a novel stochastic simulation, we show that distributive receptor methylation is necessary for successful adaptation to stimulus and also leads to large fluctuations in receptor activity in the steady state. These fluctuations arise from noise in the number of localized enzymes combined with saturated modification kinetics between the localized enzymes and the receptor substrate. An analytical model explains how saturated enzyme kinetics and large fluctuations can coexist with an adapted state robust to variation in the expression levels of the pathway constituents, a key requirement to ensure the functionality of individual cells within a population. This contrasts with the well-mixed covalent modification system studied by Goldbeter and Koshland in which mean activity becomes ultrasensitive to protein abundances when the enzymes operate at saturation. Large fluctuations in receptor activity have been quantified experimentally and may benefit the cell by enhancing its ability to explore empty environments and track shallow nutrient gradients. Here we clarify the mechanistic relationship of these large fluctuations to well-studied aspects of the chemotaxis system, precise adaptation and functional robustness. 