A character found in the world that is not controlled by a player.
NPC's can have many different purposes, such as giving quests or selling and trading goods. some NPC's have no other purpose at all other than to provide a more populated or detailed area, such as towns or campsites.
Different NPC Types
These NPC's will generally give you available quests for your level. Most time these NPC's will be found in the zone they will have you complete quests for. However, some NPC's such as Sergeant Knox will remain in the main zone known as Protector's Enclave and will be who you return to before and after each zone.
These NPC's will tell you which Foundry Quests have been created for the zone you are currently in. Speaking with these NPC's will allow you to choose and accept one of the Foundry Quests found in the area.
Merchant NPC's can be found all over the wold and in many zones. There are many different types of Merchants who will offer you various different goods depending on what type of merchant you speak with.
Not every merchant will deal with a certain kind of currency either, so be careful who you try to sell things to. Selling items to NPC's yields coins.
These are the NPC's you will find yourself selling unwanted items to, or purchasing certain goods that you can't find easily in the world.
These NPC's will allow you to speak to them to retrieve mail. While you are able to check your mail via the GUI you are unable to collect any items your mail may have attached to it without speaking to one of these NPCs.
The Auctioneer allows players to access the Auction House interface. This allows players to browse current auctions posted by others seeking to sell their unwanted, but good items.
Auction Brokers will show you a list of equipment they think might be best for you at this time in your adventuring career. They will show you how many of the item is currently on auction and what the asking price is. The auction broker interface also provides a Buy This button for quick purchasing of the item and a Find Similar button for finding items like the one he's suggested.
These NPC are simply to add a little bit of flavor to the world. You will not be able to interact with many of these NPC's while a few you can speak to for a very brief short of dialog. These are the NPC's that you'll find scattered about various zones and may even be talking with one another to play a part in the zone's story.
For example, in the Tower District there is a Half-Orc female who is upset with a guard for not letting her enter the area. She procliaims, "Just because I have orcish blood doesn't make me a Many-Arrows sympathizer!" Speaking to these two NPC's will only bring up a dialog of what they are already saying to one another when you are close enough to hear them. It should be noted, however, that if a player is a Half-Orc, then these two characters will provide a quest - Prejudiced.