My read of this ability is all the blood that has been spilled (e.g. Outside of the body) from him or ally makes the sword stronger. I imagine all the expelled blood floating into the air and then rushing to the blade Tot's holding. For each level of "Hurt" that sword inflicts little tornadoes of slicing death that allows his attack to basically do an Inuyasha Wind Scar. The video has an example of both Inuyasha's Wind Scar (2nd attack) and then when the white hair chick does her black void eating it's basically a variant of Tot's Adventure Ability Devour.
https://m.youtube.com/watch?v=fcNHnVtZvaE
No where in the description do I see that when he uses "Blood Binge" he's at risk of killing and eating his allies (or himself).
What am I missing?
You got it right. But I figured if the sword is drawing the blood toward it and the person is bleeding (meaning no one has stopped the bleeding and so far no one has) that it would draw the blood that is continuously seeping out of the person toward it thus bringing them closer to shock/death.