First and foremost, alignment is a role-playing tool of the game, which lets you decide who you are or who you want to be. While your decisions about alignment mostly affect role-playing aspect of the game, there are some differences in quests and also some rewards as well. Alignment is separated into three categories: Tradition, Integrity and Duty.
Second, alignment is needed for certain goals: in the Achievements section 'lineage' there are various achievements that request a high alignment in a specific area. E.g. for the achievement 'true knight' you need a 'hedge knight background' and a high alignment in 'New Ways'; 'Realm' and 'Truthful'.
The Old Ways embody the traditions of the Children Of The Forest, and the First Men, personal justice and respect for the Old Gods.
the Seven or the new traditions of R'hllor, and modern thinking.
Being Cunning means thinking pragmatically, avoiding revealing too much information to others, and taking advantage of opportunities. Also means "taking advantage of opportunities and looking for ways to gain profit."
When doing Sworn Sword Quests or Bonus Quests, you are presented with 6 action options (Fight, Harass etc.). Choosing a different Alignment will present you with a different set of those actions, and sometimes even with different difficulty of those actions.
There are 3 types of rewards associated with alignment:
- Bonus reward from Volume 1, Epilogue requires any Alignment at 90% or more to obtain permanent Valyrian Steel Dagger
- Alignment Quests require 20% Alignment, each of them will reward you with rare Armor or Weapon, very useful for new players or after Reincarnation
- Some Titles also require you to have specific Alignment