you can play in co-op - you get shared victory conditions, and are able to give units to command in battles where the other player is not present with troops. from this can be concluded you play with different factions.
You can also play competatifely - you don't share victory conditions and are is essence just regular rivals, like any other clan. If it is like empire and napoleon you can chose to command battles for the ai or autoresulve (the battles thing for competative is not confirmed for shogun, but will probably work like that).