What's the difference between Faction, Alliance and Great House in Dragonfire?

Three different group concepts, easy to mix up as a beginner:

1. Faction: you're sorted into a faction (e.g. North / Central / South). Factions are reshuffled every season and mainly serve collective objectives and leaderboards.
2. Alliance: it's the only group that persists from one season to the next. That's your real "clan" of players, the people you cooperate with long term.
3. Great House: purely cosmetic — it doesn't change your faction.

Worth noting: the Mercenary option gives you a random faction plus gold, once only — it isn't a 4th faction. As a beginner, the main thing is to join an active Alliance: that's where the mutual help and the lasting rewards are.