A Citizen is any NPC that lives in any city/hold/Province that is not associated with any guilds in a major way. The player may also be a citizen in a city or hold, so long as that player has met the requirements do so. Usually this is done by completing a quest or series of quests, followed by purchasing the home (See, Houses (Skyrim)/Houses (Oblivion)/Houses (Morrowind) ). A guard is likely to call all residents or visitors to a hold/city/province Citizen, regardless of them actually living in aforementioned area. Citizens are different in every city and hold.