The short version is that there are two main reasons for a vessel being federally documented as opposed to state registered.
1. For international travel, another country doesn't give a damn about your home state. They recognize the US flag, and that's the legal registration that they expect to find on your vessel. This doesn't apply to Canada and Mexico, of course.
2. For vessels purchased under a preferred marine mortgage, the lender requires federal documentation.
Other than that, the only real reason nowadays for pleasure vessels is prestige. In the old days a documented vessel didn't need to be registered with the state, but now it must be (in all states now I believe). My documented sailboat in the 80s didn't even need a state registration sticker, but now it would, though the state numbers don't need to be displayed.