to answer your post, it does work, just not perfectly by any means. Every murder count you give them lowers their reputation with that particular faction. When their rep gets low enough they technically become unwanted in that town, and besically red for that faction. Its just that their flag doesnt show it. But they still cant enter town.
at that point you can kill them and they cant give you murder counts. So besically their flag will still be blue, but they are “red” and you can kill them without consequences. Its like hidden red flag.
its a bit of a convoluted system but still waaaay more forgiving than the old system where after 5 murders you were red to every single town. And each murder tok 8 hours of ingame time to wear off. And there was nothing you could do but wait it out.
kids these days have no idea how easy they have it. And still, here they are, complaining.
To the OP: They are being punished by losing reputation every time they attack you (and gaining murder counts). I explain the system as I understand is exists right now below. In the live game it's unlikely someone would be just camping people in the graveyard because it gives almost 0 reward, they have one character tied to an account with a subscription and it has lasting consequences on their rep and murder count. Right now when it takes 2 minutes to remake and get a character to the skills etc you need, nobody cares, unfortunately.
Just watched Henrik's latest stream, and here is what he said about the system as it stands right now (unless I missed something, correct me if I'm off on any point):
- Every time you go grey, you lose rep in that area (and of course are KOS to guards for a time, and are attackable by other players for no penalty). So that includes attacking other players, and horses. Once someone goes to low enough rep, they are kill on sight by the guards in that region. Rep is regained in a region primarily through completing tasks, which right now is quite limited (mostly delivery tasks),
- Every time you report someone for a murder, they get a murder count. Murder count (apparently, I haven't tested) at a certain point makes it so you can't respawn at a priest in a non-lawless town, at all. Additionally, in the future murder count will be used for the bounty hunting system where the game will direct bounty hunters to the location of people with high murder counts and allow them to kill them without illegal action (and I'm assuming pay you for killing them).
I agree it's not intuitive as is, especially for new players, as the OP's question shows. When someone kills you, you want to know that they suffered a repercussion. Having their rep tick down silently in the background is 1) Not satisfying to the person who was just killed 2) Not clear that it's even happening or what the consequences are. As he mentioned, what the new player will see is someone just ganked them, grey timer ran out or they got killed by guards, and they're standing next to you again, still blue, with no visible consequences. If you're outside of guard range, even if they went negative rep they'll still appear blue I believe and it's even less obvious.
PS, if a new player asks a question about how the game works, try to first answer their question before you use it as a soapbox, which serves you but only serves to push new players away (eg
@PoisonArrows, who was over 5 of the first 9 posts, including the OP).