It's strictly honorary, although it's real as far as the British are concerned.
There's nothing unusual about it, either. Since WWII, over sixty Americans, including Ronald Reagan, George H. W. Bush, Norman Schwarzkopf and Colin Powell have received honors from the British monarch.
Even Stephen Spielberg, (as if to prove that money doesn't buy good taste) was invested KBE (Knight of the British Empire in 2001.
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By the way, Canada has a 90-year tradition of rejecting British titles for Canadian citizens, as being elitist and class-based.
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Really.
How strange, then, that Canadians persist in referring to their PM as "the Right Honourable". I guess Canadian egalitarianism only goes so far.