Nation Battles
Once you attain character level 95, you are allowed to join a nation of either Capella or Procyon by undergoing a nation quest. Once you join a nation, you are allowed to Player Kill characters of the opposing nation. When you succeed in Player Killing the other nation's characters, you will be rewarded in various ways like Honor Point rewards.
Background Story
After the fall of the Sage Tower, the 7 sages were disrupted. Among the fallen 7 sages, Capella and Procyon decided to pursue their principles and have established two different nations named after themselves with their followers in Nevareth. The nations come into conflict with each other because of their opposing principles. And now they choose war as the final resolution.
Procyon - Run by a Dictatorship belief.
Capella - Democratic belief system.
Ultimately there is no difference, because you'll all end up smashing eachother to bits.