Alignment
Character alignment is covered in some detail on pages 103-106 of the player's handbook, and this is reproduced on d20srd:http://www.d20srd.org/srd/description.htm#alignment.
The PHB starts by stating that Alignment is not a straightjacket, then goes on to give some clear definitions and examples of behaviour. Within this campaign world alignment is less of a straightjacket and more of a perspective on the behaviour of individuals in comparison to other intelligent individuals.
Alignment cannot be measured objectively, but should be considered an average of behaviour over a period of time, not the spot behaviour of an instant. Of course, it is possible that solitary actions may be of a scale to affect alignment but this would not be normal.
All alignment in the game-world is influenced by perspective. In general, most normal people consider themselves to be largely lawful/ordered and within their own frame of reference morally sound (i.e. 'good'), although it is unusual for people to consider themselves to be outright 'lawful-good' unless their faith demands it of them. The human capacity for self deception also plays a big part - it's quite normal for people to accept that many of the things they do during a normal day are morally suspect, but that their underlying trait is that of being 'good'. This situation becomes worse as intelligence increases. Somehow the smarter someone is, the easier it becomes to convince themself that their actions do not represent their true nature.
Also within the game world, alignments are comparitive. Those in the former Empire, for instance, consider the lands of the north to be less lawful than themselves, yet in the north the perspective is that the south are less moral and focus more on both order and greed. And within the former Empire there are comparitive alignment views between the nations. Amastia and Cerlain have reputations for being 'good', while Jorlinum and Hebria are considered less ordered - not wholly chaotic, but seem to call for less order than other nations. Tholain still suffers from a percieved lack of moral fortitude, it has a reputation for being greedy and borderline 'evil'.
Alignment Conflicts
Good vs EvilBR These alignments are both subjective and passing. Individuals can be, in any given moment, either good or evil. In fact, the other may be done in an attempt to carry out its opposite, but intent is always the arbiter of an action here. Good people do evil deeds and evil people do good deeds. The moral compass here is hugely subjective, and a character's average behaviour is what really determines their alignment in these scenarios, and that average of their behaviour can only be measured against the moral behaviour of others. Without good behaviour, there would be no evil behaviour.