The question is in the subject.
Is this affecting Windows performance for good, or damaging Windows?
The short answer is no it doesn't affect performance and it won't damage Windows, but it may make some apps complain.
The longer answer is the registry is simply a repository of settings and configuration items. Programs either look in here or not for certain things. Getting bigger isn't a problem either per se, as the entries are stored in a fashion that's accessed efficiently. That is, access is not linear, it's less than linear (likely something like if you double the number of entries in the registry, access time increases by 1)
And even then, apps typically only access the registry on start up when configuring itself and may store a copy of important entries so it doesn't bother it again.
The only thing cleaning up the registry does then is save maybe a minimal amount of space, and maybe an insignificant (in human time scales anyway) amount of time.