Bear with me, this is a long suggestion.
In 4.x, I think there should be a faction system, which would not only help with the late game gameplay that gets kinda stale after a little while but also helps resolve a few issues with 3.x.
First of all, every map would have 3 factions: 2 factions that are opposites and one that is neutral. For the sake of the example, let’s call them Coalition, Syndicate and Loners respectively. Players have a choice to join any of the 2 main factions, if they don’t, they’re immediately sided with the Loners.
The Coalition and the Syndicates would be polar opposites and would be in constant conflict, thus KoS-ing each other would be the intended purpose.
Reputation comes into play when it comes to doing actions towards other players and NPCs. Killing players from the opposite faction and doing quests from NPCs would increase reputation towards your factions. Killings players from your own faction and Loners would decrease reputation, to the point where you might get excommunicated, making you hostile towards all 3 factions.
Loner’s reputation system would work differently from other faction’s. Since both other factions are neutral to Loners, they can do quests for both and use their services in their bases (I’ll go into that later). Doing more quests to one faction would increase reputation which could in exchange offer discounts from NPCs. Loners who kill members of either the Coalition or the Syndicate would turn the entire faction hostile towards them, with no rep bonus for that faction’s enemy.
Now, here’s where the Dynamic part gets into play; compared to 3.x’s faction “system”, the factions would be completely dependent from player actions. No preset fixed locations, but instead settlements made by players instead.
When a city block, for example, is fenced off from the rest of the city by walls between each building, has player-made gates put in place and has been cleansed from zombies, it now becomes a faction’s settlement. Neither Items nor zombies will respawn in that area, but instead some NPCs will appear in random locations through the settlement, and there will always be at least an Engineer who can repair items and a Trader.
Settlements are safezones for Loners and the faction it belongs to. Just like 3.x, no weapon can physically be drawn there. Bases would periodically be attacked by hordes of zombies. If all the NPCs and players inside are killed, the base becomes deserted and items/zombies will start spawning again. It is left to anyone to remove the zombies and claim the base for themselves. Bases can also be attacked by the opposite faction. If a Loner is in the base during the attack, he is forced to defend and is temporarily part of the defending faction. Coalition and Syndicate players cannot harm each other if they’re in Loner camps.
As for NPCs, there would be 2 types that always spawn and a few others with miscellaneous services.
As the name implies, they trade items (currency up for debate), most often general items, from food to weapons. They would offer fetching quests for random items for a monetary reward. They do not buy items that have sub 70% durability.
Will repair items for money. Offers fetch quests for tools. They will also accept weapons and clothing of any durability and will give you a “Free repair” ticket for each item.
0-3 can spawn, and the available NPCs would be: Doctors, Tailors, Scrappers, Hunters/Fishermen and Survivalists. Each offer trading services (Doctors=Medical items, Tailors=Clothes, Survivalists=Misc survival items, etc.) that are superior than the items offered by Traders, thus Traders won’t have said type of items in their stock. Each offers fetch quests, and Survivalists will give unique quests about killing x amount of zombies, animals, etc.
The Syndicate and Coalition factions would have a small friendly icon above the name of their allies. The name of the player and their health can only be seen while directly looking at them up close. They cannot directly identify the rival faction members, and Loner’s would have a neutral icon about their head when hovered on. As a Loner, you cannot identify other players directly unless in a safezone.
While this idea might sound like it would increase KoS, you need to take into factor that Loners are most likely gonna be the most prominent faction, meaning that if you play as a Coalition or a Syndicate member, at least 2/3s of players will lower your reputation if you kill them, and as a Loner, only killing the players with a bad rep would positively affect your own.
TL:DR: Players make bases, NPCs appear in them, Reputation has actual effects.