Parties are temporary small groups of up to three players which are able to do activities such as quests and timespaces together. In arena, they may not kill eachother, whilst on the general field, they share experience and drops. They have their own means of communication "party chat" in the Chat interface in which they can communicate with eachother.
To create a party, a player only needs to click on another character and select 'party' from the target window. Instantly, a party is made. Your party members will be listed at the left side of the game screen.
You can leave the party at any time, simply click on the small triangle at the left hand side of the game screen below your character's HP, and click [Leave party]. Logging out automatically kicks a player from a party.