This necklace is called the Treasure Lotus Necklace, and its function is to regulate the yin and yang qi of the human body. Don't underestimate the regulation of yin and yang qi; for cultivation, unless it's an extreme path, whether the yin and yang qi is balanced and neutral is extremely important to both ordinary people and cultivators.
As for why it's called the Treasure Lotus Necklace, it's because this necklace originally belonged to a princess from a small country named Bao Lian. However, the people of that small country, from top to bottom, fell under the Ten Thousand Soul Banner, and this item naturally ended up in the hands of the Jiuyou Demon Lord.
Besides this, there is also a pair of bracelets, but they cannot both be given to Taozi, so it's perfect for the two of them to each have one.
