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Why are there factions for certain races/groups if the factions don't really mean anything?
In the lower tier zones, it is simply to add a facet in the game. For those that like to run around Thundering Steppes and harvest, it is a wonderful thing to not have to worry about being chased around by Centaurs.
However, if you gain good faction standing with a race (Centaurs in TS, for example), you will not do the many number of quests that involve killing them. If that doesn't bother, you, then all is well.
Other than not getting chased around, that's all there is to it.
Until Desert of Flames came around...
Now, to get your next level (51+) spells, you must raise your faction with a particular Court in order for the merchant to unlock your spells.
In addition, the battling factions in Maj Dul will always make a walk through town perilous. An area that was safe yesterday, may belong to another faction today, and have opposing guards out patroling the streets.
If you want to help restore the balance or even push your Court's influence even further, you and your friends can siege an opposing tower, killing and looting your way to the top, and sink your knife into the captains back, claiming the tower for your faction.
I would like to see this entire concept spread even further, and it would not really be too hard.
To gain access to a certain city zone or area, one might need to raise faction enough to get in: maybe one faction gets you past the guards, another faction gets the merchants to talk to you, and yet another faction grants you an audience to the ruling party.