Factions are pretty much just a generalized term for business, gang, or faction. Factions pretty much give players a way to group together and gives you a framework to check permissions for factions. At the type of the writing of this documentation the factions were just barely introduced so they are very basic but have a lot of core functionality built in.
If you are an admin on the server your general faction creation steps are as follows.
From this point you can press 'K' to open the faction menu and you can create whatever ranks, rank names, and assign permissions from the internal panel.
When you are done setting up a faction as an Admin you should be removing it from yourself. You should go into the options panel and simply give it to another player. However, you will need to add a player to the faction before you can do this.
You simply just need to run a command against a player id who is close to you. Keep in mind that this is not a character id it is a physical player that is inside of the server.