Do you consider the PVP tag a pure OOC game mechanic or something you rationalize the existence of in IC terms?
I've heard a few people refer to it as some sort of protection from the gods but personally I have a hard time following. Both options raise some questions.
If it is indeed an IC protection from homin attack, why is it that it works when wandering Wastelands but not for example in Elusive Forest? And why can we not ask our deities for such protection from gingo? Or source gas?

The way I prefer to RP it is the faction tagged players merely can visually recongize potentially combative homins of the opposing faction. As in we have the capability to launch attacks at any homin anywhere but we choose not to because they are not our "enemy" or at least not currently recognized as a threat.
I suppose it adds weight to the "divine protection" side, but it just feels so awkward for me to have neutrals or untagged players sitting in the middle of a PVP or outpost battle (oh, good point, OP tags would fall into the same category for me) as if nothing is going on. Even if I were untagged my instincts would be to get out of the way. I know it's necessary for gameplay that they can't be hit, but IC I can't imagine 100% protection. I treat a warzone as such even if I'm not involved.