Why it matters
A distributor that establishes itself as a distinct entity, with consistent NAP, sameAs links, and Organization schema, makes "authorized Char-Lynn distributor" resolve to it rather than a confused brand string. Engines stop guessing which company you are. Entity SEO targets that disambiguation. You define the thing, its products, and the relationships between them so a knowledge graph can store you as a known node, not a loose phrase it has to re-derive on every query.
Entity SEO vs keyword SEO
Keyword SEO matches the strings a page contains against the strings a query contains. Entity SEO maps the things a page is about to entries in a knowledge graph, then strengthens the edges between them. A part page optimized for entities states that SKU 104-1028-006 is a Char-Lynn 2000 series motor, that Char-Lynn is an Eaton brand, and that you stock it. Engines lift that as fact, not as a ranked keyword guess.
In practice
Take an MRO distributor catalog. You give each brand and product line a stable URL, mark it up with Product and Brand schema, add sameAs pointers to the manufacturer's canonical page, and cross-reference part numbers in structured fields rather than free text. Over time the engine learns your domain is the entity behind those parts, so it cites you when a buyer asks for a cross-reference or an authorized source.