A lot of factions, especially the paramilitary and services ones, just use RP and some clever use of whats available to them. However:
1. They manage religious facilities so that they can make money. Beyond that its all RP and whatever the leader would like them to do.
2. They can arrest in territories granted to them. Again, anything else is leader based.
3. Because fighting will be implemented at some point in the future. Getting ready now is beneficial rather than having to buy weapons and ships and train people after you can.