I think you can shut off circulation to the tail bone. I never wrapped a tail but we used to use tail dock pads when we traveled with our smaller trailer. They were not suppose to be left on for long periods of time and not put on tight.
I think wrapping is only suppose to go as high as the tail bone. Again I never do it but it makes sense.
Here something I found here- 20 Tips for Tails @ Horse Tack Review
"Never wrap the top of your horse’s tail. It is nearly impossible to keep a wrap on a horse’s tailbone unless it is so tight that you run the risk of cutting off the circulation. Furthermore, if the wrap irritates your horse, it may actually encourage him to rub his tail."