Either you misunderstood me, or you have little experience rock climbing.

You should always tie a knot at the end of your rope. It's climbing safety 101 and we do it to every rope in our gym. Obviously not between yourself and the belayer, you tie it at the end of the rope on the belayer side. This ensures that if for whatever reason you should run out of rope, it doesn't slip out of the belaying device, which would be catastrophic for the climber.

You're talking about top rope climbing I assume. With lead climbing you start with the climber and the belayer separated by only a few feet of rope, and gradually give out more rope. If it's too short, the knot will block the end of the rope from going through the belay device, preventing the climbers death.