First, let's look at the origin of alignment in Chainmail:
It is impossible to draw a distanct line between "good" and "evil" fantastic figures. Three categories are listed below as a general guide for the wargamer designing orders of battle involving fantastic creatures:This is then followed by lists for "Law", "Neutral" and "Chaos" with some figures appearing in two lists. The description for neutrality makes it clear how the alignment in Chainmail worked:
Underlined Neutral figures have a slight pre-disposition for LAW. Neutral figures can be diced for to determine on which side they will fight, with ties meaning they remain neutral.The underlined Neutrals, for the curious, are Elves and Rocs. Wizards appear for Law and Chaos, and Giants and Lycanthropes can go under Neutral or Chaos.
The reason I bring it up is that it makes fairly clear what alignment was at the dawn of D&D: it meant there were basically two sides, and there were neutrals who could go either way or stick to themselves, like Switzerland. This idea is simple and makes perfect sense of why alignments exist.
As for Law and Chaos, these are taken from two sources. One is Michael Moorcock's Elric novels, which are better known than the source that they borrowed from. Poul Anderson's Three Hearts and Three Lions was the first modern fantasy to create an explicit Law vs Chaos conflict. Moorcock expanded this, both in his cosmic scope and the length of the works treating it. In Chainmail, it's actually much closer to Anderson: these are sides in a conflict that is happening here and now.
Dungeons & Dragons makes it a bit deeper. More types can switch between columns - Men can be in any column, and lycanthropes are spread across (mainly because of Werebears, which can be lawful). Very little else is added; there are swords which have alignments, certain effects on clerics based on alignment, some bits given about characters in castles, etc. But the biggest come in the language section.
Law, Chaos and Neutrality also have common languages spoken by each respectively.This mainly becomes important because of the sentence before it:
All other creatures and monsters which can speak have their own language, although some (20%) also know the common one.So for 80% of creatures, there are two ways to speak with them: you can know their language, or if they are of a similar alignment, you can speak in alignment tongue to them. It's a bit risky, though, as we see soon after.
One can attempt to communicate through the common tongue, language particular to a creature class, or one of the divisional languages (law, etc.). While not understanding the language, creatures who speak a divisional tongue will recognize a hostile one and attack.This is why alignment language is a good idea in OD&D. Three pages earlier, we had a list of all kinds of creatures that have various alignments - so for instance a Neutral PC could try and talk with the Minotaur in the Neutral alignment language, even though nobody in the group speaks Minotaur. Of course this could go horribly wrong, since some Minotaurs are Chaotic, and will attack if you speak in Neutral to them! Orcs, Ogres, Dragons, Chimerae, Giants and some Lycanthropes also vary between Neutral and Chaotic. Lawful PCs run the same risk talking to Centaurs, Werebears and Rocs, and - in an interesting twist - Elves.
All this makes OD&D alignment much more interesting than AD&D's alignment. Rather than an all-pervasive cosmic force or a way to categorize the outer planes, it's an immediate question of where you stand among the creatures in the world. A Neutral can get Giants on their side - but only some of them, while it takes a Lawful to converse with a Hippogriff. Chaos is bad news, as all the undead are there along with Evil High Priests and Balrogs - the big threats from OD&:D that really fell by the wayside in later editions.
I'm curious for the comments as to who's done much with alignment tongues in your games.