The very idea of an aristocracy—as I will note a few paragraphs below, this is to be understood as distinct from royalty—was abolished in Japan with the promulgation of the post-war constitution in 1947. Since I assume you have heard of the Second World War before, I’m not going to elaborate on this any further.

However, before this, something called the Meiji Restoration happened in 1868: the ruling Tokugawa Shogunate was abolished and the emperor instated as sovereign of a new modern nation state (you can read up on this in any history book, or on Wikipedia, or consult our FAQ here ).

As part of these reforms, the old system of aristocracy was replaced by a concept of peerage modeled after European powers (e.g., after Great Britain), the kazoku. The hierarchy of peers was revamped in 1884 and both the old court aristocrats, as well as the very elite of the samurai, were merged and declared peers under this system. The House of Peers under the Meiji Constitution was recruiting itself from members of these peers.

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Further information on all these events should be easy to obtain; however, just this short summary indicates that the aristocracy before 1868 was not necessarily unified. And indeed, your mention of both the terms “royalty” and “nobility” are somewhat confusing: in premodern (i.e., pre-1868) Japan, the imperial family and the aristocracy were clearly separated by their social standing:

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We might use the term “royalty” to refer to members of the imperial extended family (which, in old times, was sometimes referred to as ōshi). In the ancient ritsuryō codes, established in the 8th century and in effect until 1868, the imperial family was defined as not only the emperor himself, but also up to five generations of his descendants (e.g, it included grand-grand-grand-grandchildren). Direct sons and daughters were eligible for the title of shinnō (male) or naishinnō (female), later generations for ō / nyoō (m/f) (these titles are still in use even today). As an exception, sixth generation offspring were also permitted to use the latter title, although they were removed from the imperial family register. We are, at times, talking about several hundred people constituting the “imperial family,” especially during the premodern era, where polygamy led to some emperors having dozens of children.

These people were, by and large, banned from taking office in the imperial court’s administration, which was monopolized by the court aristocracy: families that were either not of imperial blood or were descendants of former imperial princes who had been demoted to nobility by the emperor. This act of demotion was certainly also a means to tighten up the budget, practiced time and again over the centuries. Emperor Saga was the first emperor who demoted some of his children in 814, bestowing them with the Minamoto surname.

This means, for one, that the vast majority of the imperial family throughout history was politically much less important than the other aristocrats, who actually staffed the administration, and thus, governed. These court aristocrats (called kuge) were strictly hierarchized both by nine, numbered court ranks in descending order, as well as by hereditary access to offices within the imperial administration (simply put: if your father or grandfather did not occupy an office, then you were no longer eligible for it unless you did something extremely noteworthy). In this system, “nobility” was understood as occupying fifth court rank or above, with the first three ranks (called kugyō) being in a league of their own.

The 12th century, however, brought with it the rise of warrior government, the shogunate. Over the following centuries, the warriors displaced the imperial court’s governing authority—a process arguably only fully completed in the early 17th century. These samurai elites were also various branch families of nobles (or, if they weren't, they claimed to be). Still, only the most exalted of these qualified as "nobility": excluding the central ruling figure—the shogun himself—all other warriors, such as the regional leaders under the Tokugawa shogunate (1603-1868), the daimyō, occupied the fourth court rank at best.

This means that both the emperor, his family, and the nobles at the imperial court had experienced a decline in their influence over centuries, whereas new elites, who by definition were “less noble” took actual power and eventually constituted a new warrior aristocracy (buke). With the Meiji Restoration and the following introduction of peerage, both the ancient court nobles and the daimyō of the Tokugawa shogunate were reorganized into a new hereditary elite.

Arguably, for the court nobles, this meant that they actually had something to gain through these reforms, whereas the samurai mostly got the short end of the stick. Especially the low-ranked samurai, who, for all intents and purposes, were degraded from the ruling class to just normal people, were dissatisfied with the change (and yes, some dissatisfied samurai started a rebellion, the Satsuma Rebellion, in 1877). Incidentally, if you take a look at famous Meiji politicians, they effectively recruited themselves from the former aristocracy: for example, Itō Hirobumi, Itagaki Taisuke, and Ōkubo Toshimichi were former samurai, Iwakura Tomomi and Saionji Kinmochi were court nobles.

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Finally, you might have noticed that I spoke of samurai elites and of court nobles, but not of the extended imperial family in relation to the Meiji Restoration. As a matter of fact, although quite a substantial amount of research into various “royals” below the emperor exists for the Classical and Medieval periods (mostly, up to the fourteenth century), I am currently not aware of research into their composition and, simply put, "what they did," beyond that—and a cursory search query also did not unearth such research (there's bound to be at least something out there though). Still, I have to say that this question of how their composition was, and what they did in later periods (etc.), is pretty interesting.