I think that any implementation that can make the character "feel" like it's there instead of being a hovering psychic entity is not small. It's in the same level as ambient sounds and music. Breathing sounds when the character is stressed, or visual distortion, or advanced lights and shadows, bump maps, etc. In the end, it's those "cosmetic" features what makes a game immersive. They could have made the flashlight invisible, but when it shows on screen it serves as a way to enhance the feeling that you're actually playing someone holding a flashlight (instead of that… "psychic entity" projecting a light somehow).
It can be a way to test the physics engine, also. Instead of creating a model of every item being held, maybe they could give every item some "holding points" that the hands would use to attach the item to themselves.
I don't really know, it's just wishful thinking
Anyway, click-to-hold, I'm hoping that's easier to implement!