While you don’t hear people describing their blonde toddlers as “towheads” very often these days, spend some time reading 19th-century literature and you’ll probably come across the expression eventually.
As Grammarphobia reports, the tow in towhead isn’t akin to the tow in tow truck or undertow. The latter comes from the Old English word togian, which means “to draw or pull by force to drag,” according to the Oxford English Dictionary (OED). The former tow, which dates at least as far back as the 14th century, means “the fiber of flax, hemp, or jute prepared for spinning by some process of scutching.” Its origin isn’t quite as clear, but it may have derived from the Old Norse noun tó, meaning “uncleansed wool or flax.”
Since those fibers, used for textiles, were light tan or golden, people co-opted them to describe light tan or golden hair. This also explains why blonde hair is sometimes described as “flaxen.” Towhead first appeared in writing around 1830 and persisted throughout the 19th and early 20th centuries, especially in reference to children. In his 1850 novel Richard Edney and the Governor’s Family, for example, Sylvester Judd mentions the “bronze-faced and tow-headed Wild Olive boys.” And in an article from a September 1884 issue of Harper’s Magazine, “tow-headed children” are “rolling about in the orchards.”
It’s possible that towhead more frequently describes kids than adults simply because there are more (naturally) blonde kids than adults: Our hair darkens as we age. It’s also possible that it has something to do with the idea that a towhead doesn’t just have blonde hair, but “unkempt or tousled” blonde hair, per the OED’s definition of the phrase. Then again, that connotation could’ve come after towhead was already associated with kids, who generally do have messier hair than their grown-up counterparts.
Whatever the case, towhead is uncommon enough these days that if you toss it out in casual conversation, someone is liable to think you’re saying “toe-head” instead. This, while not actually a phrase, does vaguely sound like an insult—so it’s a good thing you’re now prepared to answer any and all questions about the meaning and provenance of towhead.