I wouldn't call it a major advantage, especially not in warfare. There are precious few places where the ability to hold your draw and aim slightly better would be useful, and in most of these (ambushes and shooting from behind cover or at people in cover), crossbow does better because you don't need to expose a lot of your body to use it.
I guess it gives you edge over other bows, but you aren't competing with just bows, you are up against all ranged weapons in use at the time.
The easier draw (as in, force expended by the human vs initial velocity), on the other hand, lets you get elite draw weight archery with people who aren't physically at that level, but the cost is... prohibitive.
I mean, yeah. And they have optical sights, red dots and all maner of fancy things, some of which are transferable to other bow types, some of which aren't. But all of those make the situation even worse in the "how expensive is this thing going to be" department, especially in age without mass manufacture.
Yeah, all of that is pretty much a myth. I do a lot of spear fighting, and let me assure you, no amount of tassels is going to make me not watch where the shiny stabby bit is pointing. I guess someone without much training may make that mistake? And as for grabbing the spear, that's about as likely as being able to parry a sword with a dagger. Can you do it? Yeah, especially against a weaker opponent. But it's extremely hard to do and not that hard to defend against.
Also, a tassel will, if anything, make it easier to grab.
Also, it's not just chinese spears.
Spoiler: English renaissance era
Also, while it's not a tassell per se:
Spoiler: Austria, c1410
Does it stop blood then?
No. I mean, first of all, there won't be all that much blood on it that won't drip off, and more importantly, what makes you think someone won't get impaled enough to go past the tassel? Or someone gets impaled and then your friend stabs him in the neck and now blood is all over the place. And you. And your friend.
There is, however, at least one credible reference to a tassel being meant to stop a liquid:
What is the tassel for?I will onelie say thus much more touching the pike∣man, that he ought to haue his Pyke at the point and middest trimmed with handsome tassels, and a handle, not so much for ornament as to de∣fend the Souldiers bodie from water, which in raine doth runne downe alongst the wood.
- William Garrard, 1591
The number one use is decoration. Be it as rank/unit insignia, as a talisman or just to look nicer. Sometimes you even see the entire spear shaft painted, and there is no limit on how fancy the ceremonial spears can get.
As for practical uses, the rainwater stopper is mentioned above, although I wonder how effective it would be in heavy rain - not much, I imagine. Another use is reinforcing the wood, the tassel has some sort of binding under it, and that helps protect the wood a bit from splintering, whether as a result of blows landing on that bit of the shaft, or from general use. It's not a very big improvement, but it does help a bit.