Faintly Macabre is treated like a witch, punished by a jail term, and feared by the population. But she's not a witch like we normally think of them: she's a Which. People punished her because, like the Soundkeeper, she tried to have too much control over what other people could say: "they never appointed a new Which, and that explains why today people use as many words as they can and think themselves very wise for doing so. For always remember that while it is wrong to use too few, it is often far worse to use too many" (5.64). Another lesson in moderation, perhaps?
Because of Faintly, Milo learns what's wrong with Wisdom and discovers the missing persons case of Rhyme and Reason. Because of her, Milo gets a purpose, or a reason for being in the Lands Beyond. She's the one who sends him on his quest.
So, even though Faintly's role in the book is small, it's pivotal. She shows Milo the way and helps to think about the important of choosing one's words carefully, a lesson we hope Milo will hang on to long after he leaves Dictionopolis behind.