Factions:

Factions are huge in the online campaign gameplay mode. If you want to play WITH your friends, you're all going to have to choose the same faction so you can fight side by side; unless some of you choose Jarlaccs; they fight with whomever they want on a per match basis. When playing "free mission" mode, you can change factions on a whim. There are 4 factions to choose from:

Pacific Rim Forces (PRF) - the good guys from the original game; now an oppressive regime.
Hai Shi Dao (HSD) - the bad guys from the original game, now freedom fighters trying to regain their country and culture.
Right Brothers (RB) - a new faction introduced for LoC. They are guerillas. These folks have unique VTs; like the sheepdog.
Jarlaccs (JAR) - a mercenary force that fights with whichever team they want to, because money is more important than pride.

You'll start with one VT from your faction. As you progress through the campaign mode online, you'll unlock more VTs within your faction (Or as time goes by "they" will just make new VTs available). Each faction has specific VTs they can pilot. The first VT each faction starts off with is as follows:

PRF :: Decider
HSD :: Vitzh
RB :: Colt (as of 03.11.04)
JAR :: Jarlaccs C Jarlaccs N (as of 03.24.04)

To see all of the VTs each faction has; check out the VT Catalog.