Exactly, another great example were the Sisters of Errolisi on Sister island in the Ocean of Tears. Some people simply considered them as good xp-fodder, but they were tied into Wood Elf factions in Kelethin thousands of miles away, so killing them would have more implications. That simple fact elevated them from some random "xp-mobs" to being a part of a greater whole. This has become completely lost in modern MMO's.
I will even go as far as saying that EQ's factions system came as close to me as it can get, when talking about "impacting the world around you". Being able to "actually have an effect on the gameworld" has been a hot topic in the last 10 years, and many MMO's have tried stuff like phasing and such. For me, molding Norrath with my Troll Beastlord through faction, has come closest to making the world change for me.
Now my actions did not change it for other players, but to be honest, that is not what I am after in a MMO. Giving *other* players the power to change the game world for you is a tricky path to go down anyway, I think devs realize this. So Faction like in EQ is a win situation if you ask me: I can now freely walk into large parts of Qeynos (but not all!); I can get quests from the Bards; I can order drinks from the Goblin Bartender, deep down in their Runnyeye lair and toast with the goblins! Not so much with the Muddites......
I'll will take that over any phasing, but that's just me. EQ faction is awesome.