Thank you but I'm British, I really don't need to have it explained to me what I knighthood is.
The whole Royal family works in two ways - the theoretical what they (or more usually the Queen) can do, and the way it actually works.
In theory the Queen can veto any law, could decide who to knight herself and so on but in reality this doesn't happen for the simple reason that the minute she did we the people would advance on Buckingham Palace with torches and pitchforks and burn the place to the ground. She is very much the Queen because the people and the government allow her to be, whatever the technicalities of the law say.
The reality of the situation is that the democratically elected government (sort of, see the House of Lords below) make all the decisions and the Queen merely "endorses them" (though even that suggests she has a say in it which she doesn't in any real way).
Do the Royal family have influence? Yes they do, but I'd suggest it's really no more than anyone else with that much money has (look at Adrian Beescroft right now) and they're far better than most with that much money in this sense as they're aware that they should remain neutral and do so. Generally the worst that happens is that Prince Charles runs his ill informed mouth about homoeopathy and architecture.
It's an odd system and no-one in their right mind would design one like it but as it operates now it's really not that broken.
If you want to take a swipe at something can I suggest the unelected House of Lords which has genuine power over the laws of the land and frequently uses it?
And even they tend to be a force for good, curbing the worst excesses of successive governments, though I may be more positively inclined towards them than I could otherwise be as I detest the current government so like that the Lords are giving them the run around.