Entities and value objects are both domain objects. What's the use of knowing the distinction between the two in DDD? Eg does thinking about domain objects as being either an entity or value object foster a cleaner domain model?
Yes, it is very helpful to be able to tell the difference, particularly when you are designing and implementing your types.
One of the main differences is when it comes to dealing with equality, since Entities should have quite different behavior than Value Objects. Knowing whether your object is an Entity or a Value Object tells you how you should implement equality for the type. This is helpful in itself, but it doesn't stop there.
Entities are mutable types (at least by concept). The whole idea behind an Entity is that it represents a Domain concept with a known lifetime progression (i.e. it is created, it undergoes several transformations, it is archived and perhaps eventually deleted). It represents the same particular 'thing' even if months or years pass by, and it changes state along the way.
Value Objects, on the other hand, simply represent values without any inherent identity. Although you don't have to do this, they lend themselves tremendously well to be implemented as immutable types. This is very interesting because any immutable type is by definition thread-safe. As we are moving into the multi-core age, knowing when to implement an object as an immutable type is very valuable.
It also helps a lot in unit testing when the equality semantics are well-known. In both cases, equality is well-defined. I don't know what language you use, but in many languages (C#, Java, VB.NET) equality is determined by reference by default, which in many cases isn't particularly useful.
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