Moll, Earthrise's Community Manager, explains that the game's setting is one huge island called Enterra which is divided up into territories. Each territory (and those players within it) will be under the protection of guards who work for the controlling NPC faction. Of course, how well protected you are by those guards depends on your location. Enterra's more developed areas, like the major cities and their surrounding environment, will be the safest. But venture too far from cities like Sal Vitas or Noir Base and you're going to face greater risks of being ganked.
Moll writes, "The further the player moves away from these civilized territories, the more security will slide down until the appearance of the guards becomes infrequent and their power can now be matched by the player."
Although Masthead Studios didn't explain it like this, if you think about it, this system even makes sense in terms of the backstory. The best NPC guards get stationed in the most plush territories, vigilant and dedicated to the task of protecting the people. The sub-par guards patrol the outskirts of civilization... and are either poorly trained or simply not motivated to come to your aid quickly if you're attacked. After all, that's dangerous.
Beyond having weak or lazy guards outside of the most civilized areas, faction penalties may affect PvP-focused players, especially when attacking others from your own faction. "Fighting, Factions, and Guards" explains more about the standings penalties players will face as a result of attacking others, whether neutral or allied, and the few lawless areas of Enterra where those rules won't apply.