I suppose an award carries a certain prestige, although I can never remeber where in the pecking order MBEs, OBEs etc. come. I'm impressed by someone who got one through charity work, but I don't imagine it would get you a better table in a restaurant, for example. It's a nice occasion to meet the queen, I suppose.
I just find it odd that so much is made of the awards when they are awarded, but if there is nothing with them, then a knighthood is just the same as any other award.
The only Honour that is solely within the Queen's gift is that of Companionship of the Order of the Garter. (There can't be more than 24 Companion Members at any one time).
All other Honour's are given by Her Majesty's Government, nominally on behalf of Her Majesty.
The differences between 'MBE', 'OBE', etc are entirely ones of rank. So a Member of the Order of the British Empire (MBE) is junior to an Officer of the Order (OBE) who, in turn, is junior to a Commander (CBE) and a Knight (KBE).