You know what's weird? This is probably a stretch, but as soon as I heard the name years ago, I thought it was a short form of Tatum. I was surprised to see it as a first name.
Even if it didn't come from Tatum, it could still be a proper diminutive.
As I understand it from my reference books (A Dictionary of English Surnames by Reaney & Wilson, for instance) technically it is the surname Tait that goes back to the Old Norse word for "cheerful", while Tate goes back to an Old English name, Tata, the original meaning of which is unknown. Since Tait and Tate are pronounced identically, I'm sure over the centuries there has been some confusion in spelling and some "Tate" families may originally have had medieval ancestors with the Old Norse name. But the origin does seem to be a bit more complicated that just "Old Norse" for "cheerful". [noted -ed]
Even if it didn't come from Tatum, it could still be a proper diminutive.