You can do all content together as long as it’s a premade group and aren’t using Dungeon or Raid Finder (which is a dumb hurdle, but whatever). Because of this, most likely you won’t be able to do normal/hero dungeons or LFR, beyond that you realistically can do all the stuff you would typically be doing at endgame (m+, normal/hero/myth raid).
You can’t do world content like questing together, but you can do certain world quests or help each other with world quests. I just don’t think progress will be universally tracked across the group as it normally would be in a reg group.
PvP is also cross faction, but of course it needs to be premade and one of you will have to use the ‘mercenaries’ option iirc.
In a group you cannot heal members of the opposite faction within your group unless you’re in an instance.
The game still treats you like you’re members of the opposing faction outside of instances. You cannot do quests together and you will still be attacked if you’re in the opposite faction’s territory.
You cannot receive buffs from someone of the opposite faction unless you’re in an instance.
You speak different in-game languages from each other unless you’re in a group.
In a group you are able to trade with each other when in an instance.
You may have the same guild, and are able to speak with each other in guild chat without any issues.
With the addition of war mode you may not attack each other unless you both ‘opt-in’ to this option. War Mode is the world PvP option a lot like how world PvP worked on a PvE server in classic (you have to actively set yourself as being targetable in PvP). If one of you has war mode on and the other doesn’t you cannot see each other as you’re put into two different phases. You may only activate war mode when in Stormwind or Orgrimmar.
Hopefully one day all these hurdles will be removed, but for the moment these are the stipulations we all have to live by when it comes to cross-faction.
With all this in-mind, if you want to level together or do casual content you will most likely want to be on the same faction, as leveling is impossible to do cross-faction. If you’re planning on running M+ or raids above LFR as your main way of playing, then the factions don’t matter. Just remember you can’t use any Random Dungeon Finder or LFR, which means you won’t be able to do holiday-bosses or any regular dungeons together.
To give my own experience with it, being cross-faction simply isn’t fun. With all the meaningless hurdles Blizz has placed, cross-faction play is butchered and made needlessly difficult. Initially, I played a Horde character on my friend’s largely Alliance guild, the logistical nightmare that would come from me being a different faction eventually amounted to me faction changing. I wouldn’t recommend cross-faction if you want to play together, it’s unfortunate that it’s this way, but it is what it is.