The free account gives you many [[Wikipedia:Why create an account?|benefits]], including more editing options and user preferences. One handy feature is the [[Wikipedia:Watchlist|watchlist]], which makes it easier for you to track changes to pages you are interested in. Another is the ability to [[Wikipedia:How to rename (move) a page|move or rename a page]]. (Do not move pages simply through copying and pasting as the edit history is not preserved that way. Instead, ask at the [[Wikipedia:Village pump|Village pump]] for a registered user's help.)
An unregistered user is identified by his machine's [[IP address]], which is used as his public identifier when he makes contributions (and signs comments on talk pages). Your computer's IP address can sometimes be used to find information about you, so registering increases your privacy by hiding it. Also, because IP addresses are often non-permanently allocated by [[DHCP]] or [[Point-to-Point_Protocol|PPP]], unregistered users sometimes find it more difficult to gain respect and recognition from other editors through building a good track record. It can also be more difficult to carry on conversations with such non-registered users since they lack a unique [[Wikipedia:talk page|talk page]].
Finally, only registered users are allowed to become [[Wikipedia:Administrators|administrators]] (or sysops).