I define it as major aspects like each faction’s exclusive races, their cities, their histories, and all of that other stuff that makes them unique from each other. No one was asking for this bull hockey about every race being made neutral, every city being opened to both factions, etc. before BfA, SL, and DF came along and the existence of allied races and peace between the factions compelled people to demand those aspects be diluted or dismantled.
Factions are still partially defined by the races within them, with some outliers that were explicitly meant to be available to both. They can invent races like pandaren that can be played on both factions and not have to change old faction-specific content. They can’t transplant a race that was meant to be Alliance onto the Horde or vice-versa when that race was created with allegiance to one faction in mind.
If you made, say, a Horde human, you wouldn’t even be able to get your heritage armor without further rule-bending because you need reputation with Stormwind, which is only obtainable on an Alliance character, and the questline takes place in Alliance territory. And if you made an Alliance nightborne, they’d have to come up with an explanation for why you exist in direct opposition to the current intro for Horde nightborne, where Thalyssra shows you the event that cemented them joining the Horde.
I hate that the two halves of the playerbase were lumped together because one side complained that more people were playing the other, yes, because I previously saw it as the sign of a game on life support; DCUO, for instance, implemented cross-faction less than 5 years after release because the playerbase was hilariously skewed toward the hero faction, while WildStar added it as a result of the myriad other issues that led to its fate.
However, it doesn’t actually compromise either faction’s image because while an orc hunter can be in a human paladin’s guild or raid group, they’re not actually in the same faction, they’re still not able to freely enter each other’s main cities, and neither needed new quests to justify why they would be.