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Originally Posted by tw
With any power reduction comes a data bandwidth reduction.
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If power is sufficent for a readable copy of the signal, data bandwidth remains constant, unless you tweak the modulation scheme...I'm not aware of any provision for that in 802.11.
For example, your Wi-Fi won't run faster if you shorten the hop distance from 20 feet to ten feet at constant RF power. And there's no advantage to running extra power unless the path loss has made the signal marginally readable...when adding power can reduce the number of unreadable packets, and this increases your range and/or aggregate data rate, as does changing the antenna gain to focus available power in a specific beam direction...that's what a Pringles can antenna does.
Above: the "Sniper Yagi" demoed by the Schmoo Group at DefCon in 2004. Alleged to have 10 mile (15km) range.
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Originally Posted by Wikipedia
Wi-Fi uses the spectrum near 2.4 GHz, which is standardized and unlicensed by international agreement, although the exact frequency allocations vary slightly in different parts of the world, as does maximum permitted power.
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Given the above, I'd guess that controllable power allows conforming the unit to regulations in various countries by changing the software config only.
I should add that S-band--the other name for 2.4 GHz--is not actually unlicenced...only the WiFi usage under FCC regs Part 15 is. Amateur Radio has a licenced primary allocation.