Iron is highly reactive, and it will quickly rust if it's not kept clean and oiled. So cleaning off blood (which will actively react with the iron, speeding up corrosion) is necessary to preserve a weapon's longevity.

Also, if you don't clean off the blood, the inside of your scabbard (which was often lined with sheep fleece, soaked in oil) will get really nasty and crusted with decomposing gore. Cleaning off blood keeps the sheath clean.