A formal acknowledgement on the part of an Other, that they won’t interfere with mankind without excuse, they’ll obey certain rules, and the practitioners will leave them be. Typically an Other bears some symbol or token of this bargain. Over time it’s gained a power of its own and being sealed physically alters the Other, but it also affords them certain protections against practitioners.
While most of the older Others are affected by this, many of the newer ones aren't and can act without it interfering with them, however the universe itself conspires to protect the innocent humans as a result. An Other who isn't bound by the seal and also elect to be bound by it to have a greater significance in the scope of things and a power source, but it will open them up to more ways of being sealed and handled as a result.
In addition a bogeyman bound by it would make them easier to keep track of and form deals with. It would nail them down in shape, form, and demeanor, stopping the Abyss from getting as much traction with them. It allows them to maintain the balance of Other and Human within.