The overhand knot is just to keep the cord from pulling back through the hole. It worked - even in the cheap stuff.

In the past I've used paracord for all sorts of things including tent guylines (works very well), clothes lines (a bit too stretchie over long lengths), tying gear to backpacks, and, as mentioned, knife lanyards. The cheap paracord lanyard was the first time I've seen well-tied knots fall apart.