I think that the situation with Harry and Megan has exposed an awkward fudge at the heart of the Royal Family. And it is about what is actually means to be royal.
I mean, why is the Queen royal? Is it because she is the head of state, or because she is from a family that inherits the role, or because she has descended from previous heads of state? Because there seems to be a fudge over this that leads to some uncomfortable places.
For if we were to become a Republic, the Windsor/Montbattens would be the former royal family, so "being royal" is connected to being a current head of state. If this is the case, then it makes sense for members of the family that support the head of state's role through working (ie. "working royal") to lay claim to royal titles -- because they are one of the limbs of the head of state, so to speak and in Britain, we still title our head of state with the historical term "Monarch". But if you look at it this way, there is no reason for anyone who does not support the head of state's work to have a royal title or be able to use any of the state funds or assets allocated to the role.
And, indeed, this reading makes sense when you consider that members of the family have opted out: Zara Phillips etc.
But then when it comes to Harry, all of a sudden, being royal seems to be about being a member of the family regardless, as though our Monarchy is not actually about a constitutional Monarchy with the Queen as head of state, but more about having a "first family". Under this model, even if you opt out of supporting the Monarch through being a working royal, you are still "royal" by default of seniority of birth and can still use some of the funds or assets available to support the Monarchy. The H&M statement certainly suggests that Harry believes this to be the case, as do the Palace comments about it being "unthinkable" to remove Harry's titles because he would then have to genuflect to less senior members of the family.
Again, this reading makes sense when you consider Andrew's position, who is still "royal" despite the fact he can no longer undertake royal duties.
So there's a fudge here. And to be honest, the "first family" model makes me very uncomfortable. I don't think the British people have understood the Monarchy to be a "first ruling family above all others to be funded in perpetuity by default of birth and with access to state privilege regardless" since the 17th century.
I think we badly need a national conversation about the Royal Family and what the definitions and parameters actually are.