With the coming shift to new Salesforce Identity licenses taking the place of Pardot-only users, there's an important limitation with Salesforce licensing that you need to know and understand.
If you upgrade a Salesforce Identity license to a regular Salesforce license, you cannot revert it back to Identity. The upgrade is a one way street.
Here's how this might play out in practice: you hire a Pardot consultant like yours truly to work on your Pardot instance, and you issue me an identity license so I can get into Pardot to work my magic.
Then you discover "oh, you can help me with things in Salesforce too?" And you upgrade the license to Sales Cloud Administrator so I can help configure your Engagement History dashboards or B2BMA or your campaign setup. Now, this user account is permanently associated with a regular salesforce license. It cannot be reverted back to an identity license. The only way to give me an identity license again is to create another user account with an identity license and mark the other as inactive.
Another scenario that I can easily see happening is you have Pardot-only users that are in Pardot almost exclusively, but you activated connected campaigns and you want to allow one of your Pardot users to create some campaigns in Salesforce-- you upgrade the license so they can do the work and Boom! No downgrade.
Just another thing about the coming changes to Pardot that may not be widely recognized.
This is the documentation that explains this.
And yes, "no downagrade path" has been a long standing complaint, long before the Pardot authentication retirement came about. It is unlikely to change.