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There is guy on youtube name moreconsole he talks about factions in more details
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the factions are more of a political groups you can represent and they have a vision of how the ideal city would be and based on what you believe you can join one that suits you, you will get missions for that faction and in pvp you fight for your faction ( not sure of that but i do think so ) thats all i know
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Maybe they are the last remnants of companies and organisations from the Golden Age?
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I thought I was the only one that longed to know the story behind the factions, or at least a idea of how it will be used in Destiny. I'm really interested in finding out about all of them, but I have a feeling I will end up choosing Dead Orbit anyway.
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We don't know yet :)