Most groups -- or factions -- in the game have their own reputation, which ranges from hated to exalted. At hated, hostile, and unfriendly, members of the faction will be indicated by red text. At hated or hostile level, faction members will attack you on sight, but once you reach unfriendly they'll no longer attack -- though you still can't interact with them. At neutral, members of the faction will be indicated by yellow text meaning you can interact with them freely: talk to them, trade with them, or accept quests from them. At friendly, honored, revered, or exalted level, faction members will be indicated by green text.
The trip from hated -- or even friendly -- to exalted is a long one, but almost always worthwhile, because as you gain standing with a faction you also gain rewards.
Filed under: WoW Rookie