The Player vs Player update was released a couple days ago, and now that players have gotten a chance to explore it for themselves, I'm going to outline all the changes below:
First, you'll notice the town of Root looks different today. I've added a new area for PvP Arena telepads. You can try out PvP by using one of the three arena telepads:
Fighting other players in PvP designated areas will reward you with gold! In PvP arenas or dungeons you will respawn at player designated spawn points in the current arena -- no more journeying all the way back from Root each time.
Mayors - you can make your town into a PvP arena! This update allows you to specify a type of town via /townpvp <pvp type>, where pvp type is: off, on, bounty, or dungeon.
This setting disables PvP combat entirely. Respawns happen at root. Intended for normal towns.
This setting enables PvP. Each PvP kill in this type of area gains the victor 3 gold.
This setting enables a special form of PvP. Each player has a 'bounty' shown over their head in square brackets next to their name. The more consecutive kills, the higher your bounty. Killing another player resets their bounty, increases your bounty, and gives you their bounty's worth in gold. How high can you get your bounty?
This setting disables PvP, but respawns happen at player designated spawn points. Game text will refer to the town as a dungeon. Don't forget to place some monster spawners for players to fight!