Allowing duplicates makes the game more difficult for the guesser in two ways:
As notes in other answers, there are more possible solutions (10,000 versus 5,040).
Each "hint" from the mastermind gives potentially less information.
There would be a few ways to deal with the rules, but for simplicity sake let's assume that the mastermind must answer "correct position" if the peg's colour is indeed in the same position, and each peg in the guess can only clue one peg in the solution. For example, suppose the solution is WWGB. Then:
A guess of YYBB would get one red peg (correct colour, correct position).
A guess of YYBY would get one white peg (correct colour, wrong position).
A guess of WYYY would get one red peg, as would YWYY.
A guess of YYWY would get one white peg.
A guess of YYWW would get two white pegs.
A guess of YWWY would get one red peg, one white peg.
In standard mastermind, if you know that the first peg is white then you don't need to guess white for any other position. But with duplicates allowed, you can't make that assumption - you potentially need to guess WWWW to see how many whites are in the solution, then GGGG to see how many greens, and so forth.