The purpose of registering an app with Azure AD is to authorize a client/app to access some resource that AAD controls access to (for which AAD is the authorization server). For example, the MS Graph Powershell module (client) needs to be granted access to the MS Graph API (resource). The resource directs the client to Azure AD (the authorization server) where the user (resource owner) must authenticate themselves and consent to delegate the requested permissions (scope) to the client.
Although the original use case for the OAuth2 flow was to support granting third-party apps access to resource, it is also used for first-party apps, as in the example with the MS Graph Powershell module access the MS Graph API.
A user can authorize an application to access some data at the protected resource, while acting as that user. The permissions that allow this type of access are called “delegated permissions.”