May be rather easy to abuse. Some mobs being scared of fire/artificial light etc (wolves anyone?) makes sense. Undead? Less so.
I imagine that mobs won’t be able to spawn near most artificial objects (or people, or in visible territory), because this would be the easiest way of preventing them from popping up inside or too close to your settlement. Sure, you could I guess plop a vast grid of anti-mob-spawn objects down over a huge area to be safe, but that’s (a) a lot of work and (b) may not work if there are any mobs interested in trashing your things / stealing them etc.
Don’t see what’s wrong with this. Weak sword with chance to deal damage over time.
Certainly having additional mechanisms for keeping mobs away from areas is a good idea in general, whatever form it takes. Eg light an area up… or wall it off, or place a magic device in it that pushes mobs out, or… you get the idea.
See the actual hearth IMHO.