This means when you want to implement things like the Online Safety Act you basically have to implement alternatives to ID verification like age estimators which isn't ideal (for the government anyway).
With a digital ID anonymous age estimators will no longer be required, so when someone is trying to watch porn or view footage of a political protest they'll have to identify who they are instead of using a fake AI face.
They don't have any real benefit over passports expect for the fact that a passport is a selectively issued document which not everyone living and working in the UK has access to or has applied for, but with digital IDs everyone will have one so there will no excuse to not identify yourself any time the government wants you to.