alliance. what does it mean?

[vartan]

You're thinking of modern alliances that have included in their agreements clauses that state something to the effect of: If you are attacked my your neighbors, I will come to your aid.

In EB, or any TW game AFAIK, if your ally is attacked, you aren't at war with the opponent automatically. You simply can't make an alliance with them, unless you break your current alliance. Also, if one of your allies attacks another of your allies, then you are given a choice of which side you'd like to take (the other side won't become your enemy, just a neutral nation). Play the first turn of the Hai to find out what it's like. Works for Pontos and Pahlava as well IIRC. Or was it Bactria?

[ARCHIPPOS]

Alliances don't mean much.Most times when you share borders with an allied faction you WILL get attacked.There are of course some exceptions :)
Gauls won't attack you if you start as Casse. Eipiros won't attack you if you play as KH and make peace with them.Pahlava won't attack you if you play Baktria (and vice versa) etc, etc... I mean at some point they're BOUND to attack you.But not during the first 20-30 years or so... also allied nations will not actively help you when fighting a common enemy.Sometimes they may tie up some enemy troops in a far away front , othertimes your ally and your enemy will simply ignore eachother...
TRADE RIGHTS (with bordering nations) on the other hand are really important because they can jack up your economy (combined with ports etc)...

[Olaf The Great]

It means the factions you ally with will be crippled economically and lose most of their battles because the game really hates the player.