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Reputation is our system for measuring how a player behaves in game. We want to provide a means by which a player can judge the aggressiveness of other players at a glance, get some idea how likely they are to attack, and get an idea as to their social behavior. Reputation only affects your interactions with other players...
Alignment is a measure of the character's morale fiber as measured along two axes: Good vs. Evil and Law vs. Chaos. The initial Alignment system is not going to be too complex, as detecting good or evil acts within the game is pretty hard aside from some specific actions. Making the system more robust is going to be a long term goal. That said, we think even the basic system is enough to get started with (and Alignment is a core feature of Pathfinder, so we don't want to leave it out).