It makes chaos weapons/the boss weapon you make with quelagg's soul hit harder up to 10 held humanity, you get more random drops (also up to 10 I think), and at really high humanity you get a bunch of free resists and armor points that are vaguely noticeable (this is like at 50+ held humanity).
Also using the humanity pickup items heals you for a lot. And if you are invading some dude you can pop humanities to heal while you can't drink estus.
the def increase is really noticeable at low soul levels, particularly vs other players. and they heal you up fully, not just "a lot"