The entire system is largely superfluous and is really only good for dao/skill points.
When people want to discuss the dao with you, always agree and check their personality. Try to answer according to their personality. Everybody likes a yes-man, even the psychopaths.
Spars are fine and don’t threaten your life, you can agree to them. Becoming “Training Partners” is also a quick end-of-month dao points boost (and requires the least work for grinding skill points outside of tournaments…). Agreeing to become friends is never a bad thing too.
As strangers, you can only talk to them. This can backfire if your just/demonic alignment or your three character traits differ too much, but you can just give them gifts once they hate you. It’s easier to try to catch them into a town and just buy everybody a round of drinks over and over until you have a base rapport with them. You can mark an NPC like a sect leader with your divine sense and just check occasionally.
The quickest way to improve relations afterwards is to gift ascension materials (Irrespective of tier, even the duskflower from the first world boss works just fine.) as well as red/orange skill books (These have to be of the appropriate tier or higher.). So just grind worldbosses, when notified of their spawning, for stuff like qi pearls as gifts for later if you aren’t auctioning them while you’re busy doing something else. I guess if they’re in a tiny town you could also buy drinks forever for the few people there?
Stealing from NPCs is only worth it on very rare occasions, such as right after an auction when they have something you want. You need a higher divine sense (or use a specific artifact spirit’s ability) to steal and then get lucky with the charm roll to do it unnoticed. Lower charm is better, so unequip your mount if needed and eat the special mushroom. If noticed, you may get into a fight and they will hate you. See below for a tradeoff if you need to.
NPC hatred is like a chain of dominos. One person hates you, you kill them, their family hates you, you kill them, it never ends. I would suggest never killing anybody to reduce the sheer hassle. You can give gifts to remove hatred though, ascension materials and books will completely reverse hatred.
When somebody invites you to a place, you can perform multiple interactions with them to increase the bond. It’s a unique area you can’t see otherwise I guess? When somebody there wants you gone, make sure to check their cultivation tier before fighting.
You can also marry people etc., but all that is largely meaningless since you really only want skill points from NPCs.
If you need to track an NPC, you can use Sense to mark them. This will always show you where they are. This does not remove sense from your bar, instead your maximum sense acts as a cap for how many artifacts you can equip/how many NPCs you can track.
By the way, NPCs don’t play by your rules. Their stats are rolled and can be higher than yours can be. I got an NPC with a higher base attack than I could reach with a purple passive. And an 800% crit damage monster.