Augustus was an absolute monarch but wanted to disguise his power, so he used the term Princeps to give the idea he was merely the First Citizen.
Many Romans had held the dictatorship in earlier times, with a 6-month maximum. After Fabius was dictator in 217 B.C. the office fell out of use until Sulla had himself made dictator (without a time limit), and then Caesar had himself made dictator repeatedly, then "dictator for life." After his assassination the office of dictator was permanently abolished.
I hadn’t seen your post before I posted 60. Sorry.
The title Princeps, BTW, was not a new one. The title Princeps Senatus had always been held by the leading (usually oldest) senator, and was basically a title of respect that carried no specific authority or power.
When Octavian acquired the title Princeps it implied that he was First among all Romans, not just the senators, and essentially meant First Citizen. It was increasingly used during Octavian’s reign and those following as a euphemism for Rex or King.