Note how neither dog hurts the other and the relaxed body language of both dogs. (thedogsupernanny.com)
Holding the leash can cause the following issues: • inhibits body language of the dog • feed off of human emotions because of tension in the leash • resource guarding of owner • fearful dogs can't escape • frustrates playful dogs who may redirect on owner • leashes tangle causing potential injury dogs / humans (happydogtrain.com)
Look at the whole body language of dog to tell the difference between a snarl and smile; smiling dogs are relaxed, where as a snarling dog is more tense. (ahna.net)