FT notes that the ID-linking system is a bit limited as far as on-device registrations go. You'll be able to log into an internet cafe with the limited-function, on-device registration. For anything more involved that'd require state ID, however, you'll need to hit a registration hard point in the city. After that, your phone will cover "most functions" you'd need a typical ID card for. Like registering a business, for example.
While this sounds like the type of future we've expected, the feature's privacy implications can't be understated. Linking someone's face to what's essentially the de facto way to communicate in China is a bit scary considering how heavily the government polices the app.