I think every FRPG blogger eventually writes an alignment post. I have decided I will get mine out of the way right now. If you have read my FRPG posts, you will notice that I am a fan of addressing game actions in game. Sure I give XP, but even then most of the rewards or penalties stay in game. Plainly put, I don't penalize or reward players for actions in alignment, the world might, but the DM does not. No rating scales (I tried that decades ago and gave it up), no DM counseling sessions, no mapping alignment shifts on a graph, no knowing looks or wagging fingers.
The world does not care what alignment is written on your character sheet (more about that later). It is all cause and effect. Act selfishly and those around you will expect you to act selfishly in the future. Demonstrate your trustworthiness and you will be trusted. Be a champion of the weak or the needy and you will earn rewards for your risk taking... but only commensurate with the risks taken. Of course in the world there are those that prefer to abide with those who are selfish, or trustworthy, or champions of good, and those that do not.
One of my important jobs as DM is to have the world react appropriately. Act selfishly, getting your rewards now at others expense does just that; you get the rewards now and the world has a certain bias towards you. Conversely, be a champion of the weak and needy usually means taking your risk now and reaping the rewards later. In game terms, one is not right or wrong but just a different series of cause and effect.
You might ask, if the world does not care what is written on the character sheet in the alignment category then why write anything there at all? Or why even have alignment at all? Yes, those are good questions.
I find alignment is a useful guideline for describing a view point; whether that view is over a single action or over a life time. Followers of a particular god, who gain favor or power for advancing an alignment (notice that I did not say following an alignment - Moorcock's books are a good example of this thinking) must behave appropriately or risk losing, temporarily or permanently, those favors/powers. Conversely, characters who follow a strict code should be rewarded for that behavior. The great powers of a priest or holy warrior come with great responsibility, and the reverse is true. In those circumstances the DM must know the character's alignment so the world can choose to keep providing those powers, or not.
My world is polytheistic. There are individuals that are totally devoted to their god and alignment, but a large number of creatures, humanoids included, are more pragmatic and would give offerings or promises to gods in return for specific considerations. You might pray for a safe journey, a good harvest, safe child birth, or even fell luck to an enemy without dedicating the rest of your life to a god.
So why have an alignment at all? You might choose to have a character who is committed to a god, cause or point of view. The key word here is choose. Players choose for their characters. I think that many players should choose unaligned, which is not the same thing as neutral. If your character is not of the strong view point of one of the alignments, and is not actively furthering the cause, then you are likely unaligned. Your character makes decisions based on the circumstance, and those decisions are likely to vary in alignment to some extent based on your personality. Your character might be more interested in riches, fame, romance or whatever as more important than a 'cause'. Fine. Good. Role play and the world will play back.
Of course some monsters, races, cultures or even cities really do culturally lean towards one alignment. That does not mean everyone subscribes to that view, but it is substantially the norm and most of those creatures will act that way.
Does that make it difficult to know who are the bad guys and who are the good guys? Yes it can. And of course good and bad and relative anyway. I like it that way. Additionally in my game I have nerfed the detect alignment spell. I do not want anyone to have it that easy to purge a population. I think it makes a more interesting game with more opportunities for subterfuge.
But isn't there any absolutes of alignment? After all the monster manual has entries that say always.... Well, I do not subscribe to that thinking entirely. There are the planes outside of the prime material plan where those that are the embodiment of alignment might live. Ontologically speaking, if there are creatures of good and evil then they are gods or creatures like angels, devils, or demons. In my game even the color of a dragon is no guarantee of its alignment, only a likelihood of that alignment.
As alignment goes in my game, it is what you do that is important and you will reap the rewards and consequences of your action in the world, not on a report card.