Animals are multicellular, eukaryotic organisms that belong to domain eukarya. They have cells with membrane-bound cell organelles, such as mitochondria, endoplasmic reticulum, nucleus, Golgi body, and lysosomes. In these organisms, genetic material is present inside the nucleus (known as true nucleus), which is surrounded by double-membrane system.
If they didn't differentiate then the stem cells would stay the same type and if it somehow kept multiplying then they would just be a massive blob with no actual form or way of functioning.