Do graduate schools care if letters are confidential or not? In general, graduate programs prefer confidential letters. Admissions officials say that it displays more confidence on the part of the applicant if letters are "confidential" (meaning you, the applicant cannot see the letter). The Letter Service is required to indicate on the letter if it is confidential or non-confidential.
Some applications, such as professional schools give applicants the choice to waive their right to view their letters or not. Usually, applicants are encouraged to waive their rights because if they do not, it is a sign they are not confident in their recommenders.