Respect is she driving force that dominates the ninja community, if you don't respect the ninja next to you what's the likelihood you'd go out on a limb to save them from danger? If they don't respect you, what's the likelihood they'd go out on a limb to save you. Every ninja is part of a team, and every ninja needs their village as much as their village needs them.
Respect is a direct measurement of how confident the village as a whole and your superiors are in your abilities. Even with respect, your superiors might not like you, they might not even treat you nice. But at the end of the day they know you're the one to call when stuff needs to be done and done well. And because they have faith that you benefit the village as a whole, they are often willing to give you more resources and help you.
Respect is subdivided into three categories; Prowess, Wisdom and Devotion.
Prowess is a measure of how well you get things done. How well you survive combat, how well you get in and out to assassinate someone without being noticed, so forth and so on.
Wisdom is a measure of not only your character's knowledge, but how well they apply that knowledge to the betterment of the village. Diplomats and leaders tend to be known for their wisdom, as are researchers.
Devotion is a measure of how well your character has demonstrated loyalty to his or her village and upholds the village's values. It also shows how well they stick to tasks and apply their prowess and wisdom and see things through.
Gaining and Spending Respect
Each of the three categories are rated in points and ranks. Points are given as rewards and spent on things. Ranks are bought with points (5 points per rank). Ranks increase your requisition limit and are used as requirements for jutsu and special privileges. See their respective sections for details.
You gain respect by contributing to the game OOC or proving yourself competent IC. Successfully completing a mission, gathering information on your rivals or another village and submitting a report or otherwise being a talented ninja and serving your village can all garner you more respect.
Respect can also be lost by being incompetent. Losing a mission, divulging clan or village secrets, aiding an enemy, or otherwise showing yourself incompetent or disloyal can cause you to lose respect points. If you are reduced below 0 respect in this fashion, you start losing respect ranks on 1 rank per 2 point basis. If you have no ranks or points, then you may go into negatives with respect. Each point of negative respect lowers your requisition by 20 Ryo.