Guilds engage in battles and sieges for rating and Guild Honor Points which you can exchange in the guild's showcase. You get to help build buildings, again for GHP, and to evolve your guild. Activities... emmm there are contests from time to time where guilds compete for rewards!
Being in a guild has many benefits, and no drawbacks (as far as I can tell). Other than the social aspect of being in a guild, you may receive advice and help from guildies, especially if you're a new player. In a guild you have access to many charms, food, and potions without having to craft them on your own. Many guilds have their forums with lots of useful info, too.
Bottomline, you won't enjoy the game to it's fullest without being in a guild
