The dual capacity matters to clients. Acting as broker, the firm is an agent seeking best-execution; acting as dealer, it is your counterparty and its interest is opposed to yours. Confirmations must state which capacity applied.
Registration brings net capital requirements, the customer-protection-rule, supervision obligations and membership of a self-regulatory organisation such as finra.
Example: you buy 1,000 shares and the confirmation says "as principal, markup included". The firm sold you its own inventory. A confirmation saying "as agent, commission $4.95" means it went to the market on your behalf. The first can be cheaper or more expensive; the disclosure is what lets you check.
Related: clearing-broker, customer-protection-rule, best-execution, internalisation