a faction is how u stand with a person or group( i.e. if you kill a gnoll, your faction standing wiht groups of good people, like the City Guards will improve, but if u kill a city guard, than ur faction, or how they feel about u, will improve with the gnolls, and will worsen with the guards, this may affect if they attack you on sight, or if u are neutral the guards may not help ya ^^, and wolf man, meket said the same thing lol