What you have to do when flying straight and level is keep the horizon level with your 'dashboard' and the nose at the right position relative to the horizon. If you can't see the horizon (e.g., it's very hazy or it's night and there are no lights) then you can't do that without flying on instruments. The human body doesn't know up from down, so you have to use either the real horizon or the artificial horizon (AI) on the panel. Otherwise, you can drop a wing, not know it, and go into a spiral. (It is possible to fly without the AI, using the compass and altimeter, but that is very tricky)
Passengers can only distract you from flying by instruments (unless one is a pilot who can handle the radio load, say).
I should add the 'partial-panel' flying without the AI is only used in an emergency if the AI goes bad, to get you to the nearest safe airport.