A long time ago — or maybe not so long ago — it was commonly thought that a sneeze caused the soul to escape the body through the nose. Saying “bless you” would stop the devil from getting that person’s freed soul.
Not everyone believed that. Some believed that evil spirits used the sneeze as a chance to enter a body.
Either way, it was a good idea to say ‘bless you’ when someone sneezed, and it was kind of nice to save their souls.