Out of interest, why is it bad play or not making sense. I'm imagining a bird familiar that flies into the face of the opponent, let us say a hobgoblin, distracting him or hampering his vision temporarily thereby providing the Help. Ofcourse I would, for thematic purposes, make the hobgoblin focus his attacks on the character rather than the familiar at least for 1-2 rounds.
1) It's a first level spell that provides free advantage in combat. No action, no concentration, no save.
2) It ruins many other abilities that provide advantage as it is an easy continual source to get it.
3) It creates strangeness in character choices and invalidates others. Warlocks are better off taking Tome Pact and just getting the ritual of Find Familiar than Pact of the Chain. Arcane Trickster and Eldritch Knight subclasses come with a free advantage to an attack once per round, etc.
4) The familiar can't capital-A Attack, and yet it can attack.
5) Why is the enemy (continually) distracted by something that can't attack them? And why is this sort of 'distraction' enough for help? Surely there are many distracting things going on, on the battlefield at any given time. A giant could be fighting 5 PCs all at once and have no problems. Suddenly there is a frog and oh no my guard is down.
6) It changes the familiar from being a nice little creature that can help sometimes in scouting, sending a warning or other message, and such to a major contender in combat. It just feels wrong.
7) Why is the Hobgoblin not attacking the Familiar there? Clearly it is a huge threat which is easily disposed of. Hobgoblins esp. are combat tacticians. It is either distracting enough to be seen as a threat, or it isn't. And if it isn't, then it shouldn't be giving advantage.
This alone shows why it feels bad in play. The creature should be attacking it, but it isn't much fun to have your familiar die all the time, and isn't good cinematically either.
8) Follow up question - Do Gnolls Rampage when they kill the familiar? Why or why not?
I don't think this was the intent at all and it was just ruled this way because the final version of the Help action happened to be written this way. Some things were changed, like the 4 Elements Monk losing their bonus action ability and some were not like Agonizing Blast acting on every blast even though all other abilities like that don't. I think it was a mistake to not just issue errata in the spell or Help action to prevent it. True Strike along with the flavour cantrips are the most underpowered cantrips, but it shows just what the designers thought about giving out advantage.
When someone at the table had a familiar I told them before we started that I wouldn't be allowing any Help shenanigans. The whole table were shocked that was a thing and wouldn't have even thought to suggest it.