What does the piston retaining plate do on the front brakes? Mine are all bent up.

It prevents the piston from rotating in the caliper bore.

Why?

Because the face of the piston that contacts the pad has a slight angle to it and is supposed to be installed in a particular orientation in the caliper. I think the designated angle helps the pad bite the rotor properly, prevents pad vibration/squeal and helps the pad wear more evenly. The plate prevents the piston from rotating in its bore ensuring it retains the proper angle.