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Reputation is crucial in The Elder Scrolls II: Daggerfall. Even if social is not your primary motivation, it behooves you to be aware of the connection between your words and actions and other people's. There is a little that happens in the bay without a reason.
If you spend your time attacking every moving shape and insulting every misfortune who falls into dialogue with you, you will soon discover how unpopular persons like yourself get treated. Likewise, treating people with respect earns respect for you. The golden rule is practiced all over the bay.
You are not, however, the only creature capable of making allies and enemies. A person is seldom a hermit, but often a member of an order or a guild with interested friends and foes. Word can move like a raging river, and some channels may be hidden to you. The stranger you just insulted may be third cousin to the baron, and your stock which his lordship may plummet noticeably. Your reputation with the neonates at the Fighters Guild may have preceded you, and they may greet you with a compliment the first time you speak with them.
Reputation affects nearly every single aspect of Daggerfall: from store prices to jail sentences, from information access to earning potential. You will not be asked to do sensitive and extremely rewarding diplomatic works if a ruler does not trust you: and guilds will eject you from their charters if you are to much of a bore. The rewards for developing a trusting relationship with a bay resident are almost without measure.
Everything changes, and friendships can be brittle things. The baron will not always need the Dark Brotherhood, and the Dark Brotherhood may someday need you. As in any other aspect of life in the bay, think before you act, ask questions of a lot of different people, and remember that sometimes it is more important to have fun than be popular.