The first part of Dillon’s Rule states that local governments have only three types of powers:Now, imagine a world wherein this were not the rule. Say the rule was that a locality can make law as to anything not specifically denied. Law then becomes a function of the governing body of the locality. Let's explore how this could be applied:
those granted in express words,
those necessarily or fairly implied in or incident to the powers expressly granted, and
those essential to the declared objects and purposes of the corporation, not simply convenient, but indispensable.
The second part of Dillon’s Rule states that if there is any reasonable doubt whether a power has been conferred on a local government, then the power has NOT been conferred. This is the rule of strict construction of local government powers.
It could be argued that precedent from appellate courts no longer apply. The law of County X is only subject to the interpretations that the local judge gives it (and you thought some judges had a god complex before).
Even more likely, local criminal ordinances could become complex and entirely different from locality to locality. For instance, under Virginia law any theft of an item valued at $200 or more can lead to a penalty which maxes out at 20 years. Sentencing is in no way tied to the amount of money stolen; $202 or $2 million will receive the same sentencing recommendation. This has been a source of conflict in the recent past. Some localities want to tie penalties to the amount taken. Others, want to keep it the way it is. So without Dillons Rule Locality X will have mandatory prison sentences of 5 years for anyone who steals over $500, Locality Y will impose only probation unless over $1,000 is stolen, and Locality Z will leave the sentencing entirely to the judge's discretion.
Then, of course, will come the traffic rules. You will be driving along on a road which is 55 mph, along with three other cars. The officer will pull you over and ticket you. Why you? Because the local ordinance states that those who have paid local property taxes on their vehicle and have the sticker on their windshield can drive 55 mph but those who have not are only allowed to travel 35 mph. What? You say that local law enforcement already picks non-locals to ticket? Naw, I don't believe it.
The examples could go on forever. I'm sure there are all sorts of examples in other areas of the law but those of you who practice in those areas can add those in comments.