Realm alignment is an interchange between the people of the realm and her
regents. Give the people good laws, justly enforced, and peole become
lawful. Preach a love for life, people become good. Guilders who enforce
their monoploistic hold by toughs and bullies, or who bleed a province of
its wealth to enrich the guilder's empire will impact the realm
differently than a guilder who promotes honest productivity, good quality
products (most of medieval commercial legislation concerned quality and
price), and fair or even just pricing (two different things) will.

In the same way a DM asses play alignment watching behavior, the DM must
asses the realms reaction to its regents to determine realm alignment.

More on this later.
Kenneth Gauck