Fractured Wiki

If you flag yourself as Neutral, you can perform hostile actions against any other player. This includes attacking, stealing, and murdering.

Hurting a Good or Neutral player doesn’t turn your Alignment to Evil, but flags you as Aggressive – a condition that gets you treated as Evil in many ways. For instance, Good players become able to hurt you, while other Neutral players become able to do so as well without consequences.

The Aggressive flag lasts for a few minutes only, but some particularly despicable actions like stealing or executing a player may add additional conditions (such the aforementioned Thief and Murderer flags) that last for a much longer time.

In the end, choosing Neutral gives you the chance to be nasty when needed, but it also surely lowers the trust other players might have in you.