It's understandable that parents want to give their daughters a sense of self esteem and self confidence, and there are many tools to do so. There are also some short cuts, and the "princess" trap is one of them. Unfortunately, short cuts in parenting often lead to trouble. It's one thing for a child to play princess as part of a game, but things get out of hand when the child comes to believe she's to be treated like royalty wherever she goes.
Children need to do for themselves, and that means parents are wise to avoid catering to them. They also need to learn that everyone around them has feelings and needs just like they do. The princess treatment works against this natural part of emotional development. Princesses don't play in the sandbox, share their toys or cooperate with commoners. They have extremely high expectations and demands.
It's better to let your daughter be the real child she is, with lots of roles to try out, and things to explore, than to teach her that she's better than anyone else (including you).
Remember, while that pretty princess is adorable as can be, she's also a tyrant. And that's not going to be so pretty when she's trying to land her first job.