The purpose of this mod is to enable you to make arenas in your settlements and you also have the ability to participate assigning yourself to a faction.
Teams are simply colours.
Behaviours you can set are;
1) fight to the death
2) fight until npc 3/4 health is gone
3) ability to toggle armed and unarmed combat
4) reset to default vanilla behaviour.
Building an arena you could control 4 teams and only the factions will be hostile to other factions.
Normal npcs do not identify these "Participants" as people anymore so do not mind if you attack them or even kill them.
Great mod for arenas but also a way to dispose of synths or general undesirables in your settlement.