It is a barbaric practice and one of the main reasons I don't much care for the breed standard as outlined and adopted by the YTCA and the AKC. There is a movement in this country and around the world to outlaw all cosmetic surgery on dogs which would include tail docking and ear clipping. There are several countries in Europe who have already done so like Germany.
I think the breed standard calls for it because working dogs did damage their tails quite often while working but this is not an issue any longer since yorkies are companion dogs primarily now.
I have done the research on the pain issue as well and they feel the pain!! it is horrible, not the least bit caring and I abhor the practice and cannot wait until it is illegal.