Tail cutting and setting was commonplace hundreds of years before the ASB was created. The tendons are nicked, but it is becoming much more common to hand stretch the tail instead because you eliminate the risk of the nick healing crooked.
It was first done to prevent harness horses from clamping their tails on the reins and many believe that it frees up a trappy moving horse. Now you can scoff all you want about that, but there are some horses that move just terrible behind until their tails are freed up by nicking or stretching. I have seen it first hand. There are horses that are so tense it’s like their tail is chasing them and they are very unhappy and yes, good setting will fix it. I have hand stretched the tail on my riding horse. Heck, there are a whole bunch of sites on the internet not even remotely related to Saddlebreds about the massage benefits of doing so.
Everyone has this image of ASBs wearing an uncomfortable set 23 hours a day, and no doubt it happens. Many horses, particularly AOTR horses only wear it the week of a show. Some horses cannot be left alone with one on and only wear it when there is staff in the barn to keep an eye on it. A tailboard will NOT prevent a horse from removing a set. Trust me. If a horse wants out of the set, he’s getting out. I’ve found sets on the floor with not a snap or buckle undone, and no straps broken.
I wish that tail setting was not as popular as it is. When done by experts in a well supervised environment the results are harmless, pain free and beautiful. When poorly done or botched later in life by inexperienced caretakers, the result is pitiful.