This is a minor distinction to make it clear in writing, same as De vs de in Norwegian, and several other languages. It's a common way of turning a plural into a formal address.
Incidentally, in Norwegian the formal form is now so archaic that short of communicating very formally with a very old person, in most cases it will come across as rude and sarcastic (you're implying someone is seriously up themselves)
In a German sentence a change in capitalization of Sie can very well turn a "formal you" (Sie) into a more general "them" (sie). So it is not just spelling, although it is a very common mistake.
This is why the British and people in the US do not act the same. The British have their behaviour while us Americans have our behavior. Totally different.
