Covens
Covens are a basic alliance between neighboring players. You shouldn't attack or steal from your covenmates unless they show a * for being inactive. If you don't like your covenmates you can always bounce to a new coven via the settings page. Things are best when covens work together, certain players, Human for instance, can use Conscription Scrolls but can't use Burning Blood Potions. So, in an ideal situation, her covenmates find conscription scrolls and give them to her, while she gives the burning blood potions she finds to her non-human covenmates. Magic items can be sold for gold as well, both instantly and through an auction house.

Perimeter Wall, Swamp, Rage, and Speed can all be cast on covenmates. These are supposed to be your allies, get to know them. Also, one player per coven can be voted in as coven leader. Coven Leader can do a few basic things and gets no bonuses whatsoever. Coven Leader can set the coven name, set the coven login message, delete threads from the coven forums, and appoint a lacky, a vice, who then can moderate the coven forums too. Coven leader also joins your coven to a clan.

Clans
Clans are the machines of war in Legions of Tercia. They can only be 25% of the player base. Clans are a collection of covens, and have certain bonuses. For one, there are numerous clan-wide spells, so, even though you might not have a druid player in your coven, there might be one in your clan that'll cast Harvest on you if you're starving, which is a nice spell for food production. Secondly, opening up the clan forums provides you with instant access to all the monsters currently in your range and within your clan. The more covens in your clan, the better the odds you'll get more monsters. Clans also get war status and defensive posture. War status can give a variety of bonuses, allow for the assasination of characters, and allow for the theft of magic items.