To clear any confusion or misconceptions, this is how Cyrodiil will work according to TamrielFoundry.com.
http://tamrielfoundry.com/development-faq/#campaigns
Campaigns
* PvP comprises a major portion of endgame content in TES:O, with a mix of open-world RvR and instanced arenas. No one will be forced to PvP if they do not wish to do so, PvP participation is purely voluntary either by entering a battleground or Cyrodiil.
* The focal point of PvP in TES:O is the war between the three player factions in the central province of Cyrodiil. This entire province is the stage for endgame PvP, and its geographic map is inspired directly from that used in TES4: Oblivion. The full size of the playable area of Cyrodiil is even (slightly) larger than the landmass portrayed in Oblivion, all Cyrodiil’s major geographic landmarks and points of interest are present and will be immediately recognizable to fans of Oblivion.
* The three faction system is designed to naturally balance and lend political intrigue to the persistent PvP endgame. If any one faction becomes too powerful, the other two factions naturally tend to work together to turn the tide of battle.
* Players may begin participating in Cyrodiil from level 10 onwards. Players who are below level 50 recieve “battle-leveling” which enhances their attributes so they may participate and contribute to the alliance war. Battle-leveled players do not recieve the full complement of abilities, perks, or gear that a naturally leveled player would have, therefore a strong incentive to level and optimize your character remains present.
* Because of the megaserver technology, Cyrodiil needs to be separated into multiple instances. However, instead of random assignment of players, ZeniMax recognizes the importance of having static PvP communities for the sake of rivalry and investment in the state of the realm war. Therefore, players are assigned (or may select) a “campaign”, which is a permanent parallel version of Cyrodiil’s realm war to which they belong. Campaigns will be named after the major cities in the region.
* Guilds can collectively select a Cyrodiil campaign, and players will be able to switch campaigns, however this will impose some meaningful alliance point cost. However, you are prohibited from having characters from different factions in the same campaign.
* In order to maintain the PvP focus on the massive realm war in Cyrodiil, ZeniMax has elected to not include any form of structured or instanced PvP at launch. They want players’ focus to be on the alliance war, which is the crowning facet of TESO’s gameplay.
Objectives
* The control of major keeps throughout Cyrodiil will be the primary objective of the warring factions, but mines, towns, and outposts present smaller objectives for individuals and groups to capture or defend. Any objective held by your team boosts the overall score for your faction. This score grants faction-wide bonuses to all players and determines if any of the three factions is able to take control of the Imperial City. The faction war requires a tactical alliance-wide effort to win. While the main battles will occur on an ever-shifting front line, a number of critical support tasks are available to players who do not want to participate directly in PvP. Setting up siege weapons, reinforcing keeps, and upgrading guards all offer ways to improve your faction’s position in the realm war without engaging in PvP directly.
* The Imperial City is initially held by Molag Bal and his Daedric minions. Accumulating sufficient control points allows your faction to invade the Imperial City and attempt to wrest it from Daedric control. This will be a dramatic and dangerous gameplay sequence for the faction involved, and constitutes one of the major endgame moments of TES:O.
* At launch, the Imperial City itself will be locked, and the campaign victory is achieved simply by controlling a large portion of Cyrodiil’s keeps and cities. After the game’s initial launch, the sieging the Imperial City itself and the armies of Molag Bal which lurk within it will be added to the culmination of each PvP campaign. If the Imperial City is successfully captured, the player with the highest contributions to the war will be crowned emperor for a period of time. This title is primarily for bragging rights rather than special powers, but will also convey some gameplay benefits.
* Elder Scrolls are artifacts of immense power that aid an alliance in the ongoing battle to control Tamriel by conferring bonuses to every member of that alliance. Each alliance has a special stronghold in Cyrodiil where their Elder Scrolls are kept and protected – but enemy alliances can break in and take them if they are not guarded properly. Once access is gained and a Scroll taken, it must be taken back across Cyrodiil and placed in the alliance’s stronghold. Only then are the bonuses of the Scroll bestowed upon all the members of that alliance.
* Siege weaponry will play a vital role in keep warfare, with both offensive and defensive war machines to strengthen a side’s position. Parts of a keep can be destroyed completely, eliminating bottleneck situations. With enough firepower and determination, a group of players can effectively demolish an entire keep by destroying its walls and towers.
* Each faction controls a “home” portion of Cyrodiil, and the cities and towns within your home portion are more valuable than those of your enemies. This makes it important for each faction to defend their homelands, instead of simply cycling control of keeps.
* Natural fortifications and chokepoints are scattered throughout the map. These are not necssarily tied directly to any objective, but provide substantial strategic value for roaming groups. If used properly, the terrain can be used to set up ambushes, or repel a much larger force at a natural bottleneck.
* Guilds can claim control of any objective in Cyrodiil from keeps to small outposts. Control of an objective allows the guild to further upgrade its defenses, and customize the placement and role of NPC guards which defend it. Guild members recieve immediate notification if their objective comes under assault from enemy forces.
* Keeps and smaller objectives are captured by flipping a series of banners which are captured by holding their immediate vicinity. There are no keep lords or other required NPCs which must be killed, this keeps the emphasis on player vs. player combat.
* ZeniMax Online is working on a way to allow players to infiltrate a keep by scaling the walls. The brave (or foolish) can attempt such an assault to catch the enemies unawares.
PvP Mechanics
* Stamina management will be a decisive factor and indicator of player skill, as the ability to conserve stamina to perfectly time interrupts, blocks, and CC breaks can be pivotal in resolving fights.
* There is no separate gear progression for PvE gear and PvP gear. TES:O there will have various tiers of powerful gear, some of which will be acquired through PvE, while other pieces will require PvP participation to earn. In order to obtain the best possible equipment for your character, you will need to complete a mixture of all types of game content. Loot from PvE will be useable in PvP and vice versa.
* Stealth functions are similar in PvP to past games. A stealthed character is invisible to enemies unless they are detected, at which point they are a shaded outline. Stealthed players are fully uncovered when they take damage or attack an enemy. Since every class in TESO has some basic stealth ability, this creates very interesting possibilities for coordinated ambushes and surprise attacks.
Alliance Ranks
* Alliance points accumulate through killing enemies and taking objectives in Cyrodiil. This constitutes an alternate advancement system through which the player can earn Alliance Ranks. There are 23 ranks planned for launch, although this number is subject to change.
* Players will be able to spend Alliance Points on gear and character upgrades. The details of this system are still undergoing development and balancing.
TamrielFoundry.com References (so everything is pretty accurate)
(GI1) Game Informer – June 2012 Cover Article [ARTICLE]
(GI2) Game Informer – The Origins of The Elder Scrolls Online [VIDEO]
(GI3) Game Informer – The Challenge of The Elder Scrolls: An Interview With The Creative Director [VIDEO]
(GI4) Game Informer – Faction Profile: Daggerfall Covenant [ARTICLE]
(GI5) Game Informer – Faction Profile: Aldmeri Dominion [ARTICLE]
(GI6) Game Informer – Faction Profile: Ebonheart Pact [ARTICLE]
(GI7) Game Informer – Creating the Story for the Elder Scrolls Online [VIDEO]
(GI8) Game Informer – Exploring Quests In The Elder Scrolls Online [VIDEO]
(GI9) Game Informer – Why The Elder Scrolls Online Isn’t Using HeroEngine [ARTICLE]
(GI10) Game Informer – The Tactical Combat Of The Elder Scrolls Online [VIDEO 1][VIDEO 2]
(GI11) Game Informer – Special Edition Podcast: The Elder Scrolls Online [ARTICLE]
(ME3) Machinima E3 Live Show – Day 3 [VIDEO]
(G4E3) G4 Elder Scrolls Online E3 Gameplay Demo [VIDEO]
(GSE3) Gamespot E3 2012 Live Show – Day 2 [VIDEO]
(PCG1) PC Gamer – Exclusive Developer Interview [VIDEO]
(TWIT) Elder Scrolls Online Official Twitter [LINK]
(FB1) Elder Scrolls Online Facebook – Introduction to the Lore of Elder Scrolls Online [LINK]
(TF1) Tamriel Foundry – Hands-On With The Elder Scrolls Online [ARTICLE]
(ESO1) The Elder Scrolls Online Official Website [LINK]
(MH1) MMO Hut – Elder Scrolls Online Reveal Interview [VIDEO]