Having just two Factions that you can choose from (that are not good and evil, unlike WoW) eliminates the competition between continents. Different Alliances will obviously form on the different servers but the competition will only be between the two Factions (as far as I am aware). No more concerns about particular continents pwning each other or there being two many people fighting against each other to get 'Favor.' Ability will, hopefully, be equally spread and there won't be this horrible system of having to fight for a long time to get and hold favor.
Secondly, the whole system of the Factions is designed to narrow the gap between PvE and PvP, in that there are different methods of competition that all link together in the conflict.
Thirdly, with alliances between different guilds and the necessity of having both PvE and PvP to be strong, the two modes of gameplay will be much more closely linked and hopefully much of the 'enmity' between the two will be destroyed.
Fourthly, it brings in bigger battles. Fighting for the control of maps and territory, even cities, with bigger teams and even more focus on combined strategy. It will be a real test of teamwork and skill, in my opinion, which are the two things that really make up the heart of this game.
Fifthly, if I am correct, some story missions will link to the whole Factions thing, such as teams from either side fighting for control of supplies etc. If this is true then this is a great way to intertwine the story with the Factions system.
And, of course, amongst all of it is a beautiful new continent filled with places to explore, people to talk to and quests and missions to complete, still hopefully focusing as much on teamwork and skill as ever.
In my opinion, this game is going to really bring out the best of the entire Guild Wars theme. The idea of conflict between two sides that are equal in ability and number. The different game modes of PvE and PvP much more closely linked and working together, so no more of the hatred that has been seen in the previous game. To be strong a fighting alliance will need to be skilled in both of these aspects. Mighty alliances of guilds aligned to the Factions, fighting against each other in big battles and wars over large maps, for the control of territory and resources, linking PvE and PvP even more. Story missions linking to the Factions idea. And last of all, the setting of the game itself and the adventure within it. Cantha, a huge and interesting new continent with great cities and beautiful landscapes, and within this being the adventure, the people you meet, talk to and fight alongside, the quests, the missions, the story. My hopes are high for Guild Wars: Factions. I greatly applaud Anet for bringing together this great system designed to eliminate problems and build a generally much stronger game. Though I do not know much about it just like everyone else and cannot judge just how good it will really be, I can already see how much thought and effort has gone into this. Great job Anet, /majorapplause