Entry ticket, basically. I went to Olympic Natl park recently and had the pass added to my Apple Wallet.

What's the difference here between adding the "custom pass" and just taking a photo of QR code? Just the fact that it is stored in Wallet instead of photos folder?

It's stored in Wallet so you can access it through the Wallet shortcut (double-press power button), when you open it the screen automatically brightens, and it's a perfectly clear QR code rather than a picture so it'll be easier to scan.

In addition to the sibling comment: I really dislike opening my Photos app in front of other people.