In ancient Chinese culture, there was the concept of “lesser” wives. And the offspring of these wives were also considered “lesser” especially in the case of daughters. Among the wealthy Chinese, it wasn’t uncommon to live with a wife and several concubines under the same roof.
I think a “blind eye” doesn’t necessarily indicate agreement or approval of an action. It could also mean that the onlookers don’t agree but feel that it’s either not their place to say anything…or they feel that it would be futile to bring the issue up.