Same - it's not really functional as much as that it keeps the end from being annoying. The alternative is doing a yosemite finish, which a number of my friends prefer.
This is exactly right. It can be especially useful when lead climbing, as it eliminates the risk of accidentally grabbing the tail. Grabbing the tail is unlikely to result in safety risks (unless you have an obscene amount of it), but the less time you have to spend fumbling with your rope while lead climbing, the better.