(since this discussion has made me feel like crusading against loose interpretations)
FROM THE d20v3.5 SRD:
LAW VS. CHAOS
Lawful characters tell the truth, keep their word, respect authority, honor tradition, and judge those who fall short of their duties.
Chaotic characters follow their consciences, resent being told what to do, favor new ideas over tradition, and do what they promise if they feel like it.
"Law" implies honor, trustworthiness, obedience to authority, and reliability. On the downside, lawfulness can include close-mindedness, reactionary adherence to tradition, judgmentalness, and a lack of adaptability. Those who consciously promote lawfulness say that only lawful behavior creates a society in which people can depend on each other and make the right decisions in full confidence that others will act as they should.
"Chaos" implies freedom, adaptability, and flexibility. On the downside, chaos can include recklessness, resentment toward legitimate authority, arbitrary actions, and irresponsibility. Those who promote chaotic behavior say that only unfettered personal freedom allows people to express themselves fully and lets society benefit from the potential that its individuals have within them.
Someone who is neutral with respect to law and chaos has a normal respect for authority and feels neither a compulsion to obey nor a compulsion to rebel. She is honest but can be tempted into lying or deceiving others.
Devotion to law or chaos may be a conscious choice, but more often it is a personality trait that is recognized rather than being chosen.
Neutrality on the lawful-chaotic axis is usually simply a middle state, a state of not feeling compelled toward one side or the other. Some few such neutrals, however, espouse neutrality as superior to law or chaos, regarding each as an extreme with its own blind spots and drawbacks.
Animals and other creatures incapable of moral action are neutral. Dogs may be obedient and cats free-spirited, but they do not have the moral capacity to be truly lawful or chaotic.
THE NINE ALIGNMENTS
Nine distinct alignments define all the possible combinations of the lawful-chaotic axis with the good-evil axis. Each alignment description below depicts a typical character of that alignment. Remember that individuals vary from this norm, and that a given character may act more or less in accord with his or her alignment from day to day. Use these descriptions as guidelines, not as scripts.
The first six alignments, lawful good through chaotic neutral, are the standard alignments for player characters. The three evil alignments are for monsters and villains.
Lawful Good, "Crusader": A lawful good character acts as a good person is expected or required to act. She combines a commitment to oppose evil with the discipline to fight relentlessly. She tells the truth, keeps her word, helps those in need, and speaks out against injustice. A lawful good character hates to see the guilty go unpunished.
Lawful good is the best alignment you can be because it combines honor and compassion.
Neutral Good, "Benefactor": A neutral good character does the best that a good person can do. He is devoted to helping others. He works with kings and magistrates but does not feel beholden to them..
Neutral good is the best alignment you can be because it means doing what is good without bias for or against order.
Chaotic Good, "Rebel": A chaotic good character acts as his conscience directs him with little regard for what others expect of him. He makes his own way, but he's kind and benevolent. He believes in goodness and right but has little use for laws and regulations. He hates it when people try to intimidate others and tell them what to do. He follows his own moral compass, which, although good, may not agree with that of society.
Chaotic good is the best alignment you can be because it combines a good heart with a free spirit.
Lawful Neutral, "Judge": A lawful neutral character acts as law, tradition, or a personal code directs her. Order and organization are paramount to her. She may believe in personal order and live by a code or standard, or she may believe in order for all and favor a strong, organized government.
Lawful neutral is the best alignment you can be because it means you are reliable and honorable without being a zealot.
Neutral, "Undecided": A neutral character does what seems to be a good idea. She doesn't feel strongly one way or the other when it comes to good vs. evil or law vs. chaos. Most neutral characters exhibit a lack of conviction or bias rather than a commitment to neutrality. Such a character thinks of good as better than evil-after all, she would rather have good neighbors and rulers than evil ones. Still, she's not personally committed to upholding good in any abstract or universal way.
Some neutral characters, on the other hand, commit themselves philosophically to neutrality. They see good, evil, law, and chaos as prejudices and dangerous extremes. They advocate the middle way of neutrality as the best, most balanced road in the long run.
Neutral is the best alignment you can be because it means you act naturally, without prejudice or compulsion.
Chaotic Neutral, "Free Spirit": A chaotic neutral character follows his whims. He is an individualist first and last. He values his own liberty but doesn't strive to protect others' freedom. He avoids authority, resents restrictions, and challenges traditions. A chaotic neutral character does not intentionally disrupt organizations as part of a campaign of anarchy. To do so, he would have to be motivated either by good (and a desire to liberate others) or evil (and a desire to make those different from himself suffer). A chaotic neutral character may be unpredictable, but his behavior is not totally random. He is not as likely to jump off a bridge as to cross it.
Chaotic neutral is the best alignment you can be because it represents true freedom from both society's restrictions and a do-gooder's zeal.
Lawful Evil, "Dominator": A lawful evil villain methodically takes what he wants within the limits of his code of conduct without regard for whom it hurts. He cares about tradition, loyalty, and order but not about freedom, dignity, or life. He plays by the rules but without mercy or compassion. He is comfortable in a hierarchy and would like to rule, but is willing to serve. He condemns others not according to their actions but according to race, religion, homeland, or social rank. He is loath to break laws or promises.
This reluctance comes partly from his nature and partly because he depends on order to protect himself from those who oppose him on moral grounds. Some lawful evil villains have particular taboos, such as not killing in cold blood (but having underlings do it) or not letting children come to harm (if it can be helped). They imagine that these compunctions put them above unprincipled villains.
Some lawful evil people and creatures commit themselves to evil with a zeal like that of a crusader committed to good. Beyond being willing to hurt others for their own ends, they take pleasure in spreading evil as an end unto itself. They may also see doing evil as part of a duty to an evil deity or master.
Lawful evil is sometimes called "diabolical," because devils are the epitome of lawful evil.
Lawful evil is the most dangerous alignment because it represents methodical, intentional, and frequently successful evil.
Neutral Evil, "Malefactor": A neutral evil villain does whatever she can get away with. She is out for herself, pure and simple. She sheds no tears for those she kills, whether for profit, sport, or convenience. She has no love of order and holds no illusion that following laws, traditions, or codes would make her any better or more noble. On the other hand, she doesn't have the restless nature or love of conflict that a chaotic evil villain has.
Some neutral evil villains hold up evil as an ideal, committing evil for its own sake. Most often, such villains are devoted to evil deities or secret societies.
Neutral evil is the most dangerous alignment because it represents pure evil without honor and without variation.
Chaotic Evil, "Destroyer": A chaotic evil character does whatever his greed, hatred, and lust for destruction drive him to do. He is hot-tempered, vicious, arbitrarily violent, and unpredictable. If he is simply out for whatever he can get, he is ruthless and brutal. If he is committed to the spread of evil and chaos, he is even worse. Thankfully, his plans are haphazard, and any groups he joins or forms are poorly organized. Typically, chaotic evil people can be made to work together only by force, and their leader lasts only as long as he can thwart attempts to topple or assassinate him.
Chaotic evil is sometimes called "demonic" because demons are the epitome of chaotic evil.
Chaotic evil is the most dangerous alignment because it represents the destruction not only of beauty and life but also of the order on which beauty and life depend.
Some acts are so heinous and dishonorable - so UNLAWFUL that international law, in some form or other, has seen fit to ban them. Other international regulations are not banned for their lack of honor or ethics, but because they harm commerce. The difference is usually fairly clear. Smuggling can be considered honorable if it's for a cause supported by traditions that are the basis for law and which authorities (or those from whom they derive their legitimacy) at least covertly condone - smuggling medicine into a country suffering under trade embargos, for instance. Assassination cannot be considered honorable. We do not assassinate our enemies because we hold ourselves to a basic ethical standard that prohibits it. In order for an ethical standard to be considered lawful, it has to cover the very basic elements of lawful characters: "tell the truth, keep their word, respect authority, honor tradition," Now, you can decieve and mislead a lot without ever lying outright. Robert Jordan pads his books out at least an extra hundred pages based on this concept alone.
A lawful-evil character WILL NOT assassinate a noble (without suffering an alignment shift) but he may subtly encourage a rebel faction in a country toward that end, without ever saying someone should assassinate the noble. A lawful-evil character WILL NOT outright lie to you, but he will not tell the whole truth, and the truth you think you hear is almost always a misdirection or deceit of some sort. A lawful-evil character will never directly oppose an authority, except on the orders of another authority, and they frequently position themselves such that they have discretion and authority of their own. A lawful-evil character will treat authorities with respect, mostly because that's the best way to make them trust you. A lawful-evil character will honor tradition, especially where tradition supports his own agenda. And when it opposes his agenda, he will find an alternate interpretation of tradition, but never directly contradict it. He will find a way to make his schemes fit tradition nicely. He will even value tradition, because he profits from it. Rarely will an evil character be lawful if his personal situation puts him at odds with tradition and gives him no discretion or authority. In that situation, he may change alignment (to Neutral Evil, the Malefactor) until he has regained his authority and placed himself in a tradition-honored position. Then he will switch back.
But he will not:
- Assassinate people
- Break his word... often. He will try not to, anyway, and do his best to avoid making promises that he does not intend to keep. He will word promises and oaths such that there is always a loophole.
- Steal from people except through mostly lawful means (raise excessive taxes, demand tithes, blackmail, etc)
- Break into places he is barred from (others' homes) without the authority to do so (instead he will achieve said authority so he can)
- Use Sneak Attack, except in clear cases of self-defense or defense of another's life
- Use poison offensively, because it is dishonorable - though he may use poison traps to protect his goods from lawbreakers (PCs)
- Directly rebel. If a LE noble starts a rebellion, he will have already achieved a position whereby he has enough authority to challenge the king, and whereby tradition can be twisted to support him.
EDIT: Another thought I had. Since D&D is a fantasy RPG, we must see it in that light. The alignment system defines the different types of fantasy heroes. That is why the first six alignment types represent types of fantasy hero mortalities. Some always keep their word. Others are rougish and will lie and decieve at will, but always for a good cause. Law vs. Chaos is the MOST important alignment distinction because almost all fantasy heroes are not evil. PCs are not evil (usually). It should not be interpreted as some vague guideline, but as a hard rule - if you want it vague, there's an option for you: play Neutral. Else, among other things, you will keep your word always (L) or you will break it for convenience (C).