Reputation?

How do you improve your faction’s reputation? Does having a better reputation even matter?

Well I'm not sure if everything that impact reputation is known yet. But... executing prisoners, betraying alliances, getting caught trying to assassinate someone (assassin dies), exterminating cities, all hurt rep. Releasing prisoners, assisting allies, etc build rep.

It seems easier to lose rep than build it.

It is alot easier to lose rep than gain it. It annoys the heck out of me too because I always exectue prisoners (honestly, why would I let my enemy get his prisoners back?!?!) and exterminate cities (otherwise public order is too chaotic) and if you want a smooth game you really have to do those two things (at least imo).

So yeah, after about 25 turns my reputation is always despicable even though I make a point never to attack allies until I have cancelled alliance.

Occupy cities and release prisoners. Don't attack allies. Have people pay regular tribute to you or the other way around helps too.

If you want to get rid of prisoners, a lot of times the AI's are running near bankrupt so ransom them. There's no rep hit for when they die after a ransom is refused. It's the neutral option.

But I'm still not sure whether there is any point in having a good reputation. Or a bad one for that matter.

Good rep makes diplomacy easier. Easier to get ceasefires and vassals, and end wars without having to always having to be at war with them til their crushed without a break.

You might not think that's a big deal, but with diplomacy you can gain territory without firing a shot.

it doesn't and never has for me, I had very reliable reputation and it made diplomacy or negotiations no easier.

Try negotiating from Despicable and you'll see what I mean.

Also, if someone attacks your ally and that faction is not your ally, you can improve your relations by helping out your ally