Players are allowed to party with up to 3 other people. When a player is in a party as the party leader, he will have full control over where the party goes. The rest of the party simply follows the leader around.
This can be useful for ferrying/taxiing people around the world too.
When the party enters a new location, all members of the party will automatically discover the path to that location so they can return to it on their own later.
You cannot enter an owned house while in a party. This includes Your House as well as Group Houses. This prevents players from being robbed. This does not apply if all characters in the party have access to the house already.
When the leader discovers a monster to fight, all party members are automatically entered into combat with the same monster. All members can attack the monster and just like regular combat, each attack will be followed by the monster's counter attack. Only the party leader can run from the monster, if non-leading members try to run from the fight, they are met with an error message. They can however leave the party first before attempting to run. If the leader were to die during combat, he is removed from the party and someone else then becomes the party leader.