The words principal, principle sound the same but have different meanings and spellings. Why do principal, principle sound the same even though they are completely different words?
The answer is simple: principal, principle are homophones of the English language.
First, highest, or foremost in importance, rank, worth, or degree; chief. See Synonyms at chief.
Of, relating to, or being financial principal, or a principal in a financial transaction.
One who holds a position of presiding rank, especially the head of an elementary school or high school.
A main participant in a situation.
A basic truth, law, or assumption: the principles of democracy.
A rule or standard, especially of good behavior: a man of principle.
The collectivity of moral or ethical standards or judgments: a decision based on principle rather than expediency.
A fixed or predetermined policy or mode of action.
Definitions from The American Heritage® Dictionary of the English Language, 4th Edition and Wordnik.
Homophones (literally "same sound") are usually defined as words that share the same pronunciation, regardless of how they are spelled.
If they are spelled the same then they are also homographs (and homonyms); if they are spelled differently then they are also heterographs (literally "different writing").