Do I have to pick a faction?
Yes and No; Depends on if you want to. There are three massive factions that fight for the control of the grid. These factions originally started as small gangs have now evolved into a a major force of the underworld. These are Slayers, Assassins and Deathstalkers. Each of them specializing in a particular kind of attack or skill.
Then there are mysterious ancient masters called Curators. Their origin is unknown but they are very reserved and hidden beings. They have the power to stop anyone from entering a land they oversee. They don't normally interfere with the day to day life on the grid but they can if they feel that the atrocity and harassment has gone way overboard.
You can still play the game without picking a side for helping your friends conquer. You can do so as a civilian or as a trader by boosting their supplies and bolstering their defenses. The players who are not part of a faction are called Renegades by the other factions. Renegades can change their faction to one of the power factions at anyone but only once. So they can play the game without picking a side for while and then make a strategic decision to join a faction to turn the tide of the battle.

Differences Between Factions
Assassins:
Known for highly skilled and accurate attacks. They are also great escape artists. Assassins are known to use their charm and sleuth to perform lethal attacks and annihilate nearby enemies.

Slayers:
Slayers are masters of strength and power at close range. They have enormous strength that enables them to overpower their opponents when faced in a physical combat. They have higher overall base damage.

Deathstalkers
Deathstalkers are students of mental powers and are known to be very sturdy. They have perfected the use of telekinesis and are formidable enemies in battle.