The PvP systems in AA is very similar to that of Diablo. By default your attacks don't hit or damage other players. In order to fight people, you must declare hostility on them. This can be done face-to-face through the player interaction menu, or through the World Players HUD (which is basically a graphical "Who" function).

Silk Wizard is currently hostile with Hamlet, but is on good terms with every other player logged in. Clicking on the sword button next to a player's name allows you to declare hostility or ask for a truce.
Declaring hostitliy on another player will automatically make them hostile towards you. To end this hostility, both players must agree upon a truce.
Players will be able to fight each other anytime, anywhere. Starting a brawl in the village won't be the greatest idea, as the town guards will be all over you before you can blink. Low level players will be protected in that other players can't declare hostility on them until they are level 5 or above.
Player interaction is going to be integral to Acheron's Awakening, which is why it is important to have this type of PvP system.