Trademarks are the law’s recognition of the psychological function of symbols.
The federal registration of trademarks has two primary functions:
1) Assuring the public is getting the product it wants, and
2) Protecting the owner of the mark, who has spent considerable time, money and energy promoting the mark, from misappropriation by others.
Federal law prevents others from using a mark that is "confusingly similar" to the registered mark. This prevents competitors from using the trademark owner's good will so as to confuse potential customers.
A trademark indicates the source or origin of a good or service. Consumers need not know the actual manufacturer or distributor of a product, but consumers will recognize that products bearing the mark have the same source.
For example, consumers need not know that MAC® is a registered trademark of Apple Computer, Inc. or even that Apple manufactures products bearing the mark. They need only be aware that MAC® computers are a particular brand of computers, which come from a particular source wherever that may be.
Consumers naturally come to associate a mark with a particular level of quality. For example, LEXUS® conjures a certain level of automotive quality, which may be contrasted with YUGO.
Trademark owners obviously would like consumers to associate their trademarks with high quality products, and would also like to prevent competitors from pirating their marks.