The legend that a character creates is an important factor of being a Dungeon Master. While some parties prefer to be anonymous treasure hunters all the way to max level, it is difficult in the course of adventuring not to at least inadvertently save a town, making a name for themselves. Eventually, someone somewhere has heard of the party, and that may have interesting consequences.
Player legends can be both good or bad, depending on what was done, or even the locations of an act. One kingdom may love them while another hates them. I make a point to always record any person or organization that the players make an enemy of, no matter how slight. You never know when some shorted merchant may be able to take his petty revenge on them at the worst possible moment. In contrast, I also record their allies, in case they are in dire need of aid, an old friend can come to save day. Whether good or bad, a player's legend grows as they continue their adventures, and the sphere of their influence grows with it.
In older editions of the game, a fighter's influence actually rose based on their level. For example, in second edition, at ninth level a fighter would become a lord and automatically gain followers and elite units that would follow him into battle based on his fame. It was built into the game. In 3.5 though, there is the Leadership feat, which allows players to do something similar, acquiring cohorts and followers, but depending more on their actual legend, and past experiences. But these only affect friendly NPCs that are meant to flesh out a party, or build an army. How does one imbue a player's legend into the game if they don't allow cohorts and followers, in an attempt to keep things simple?
For myself, I ignore the Leadership feat and tend to ban cohorts and the like. I find them distracting from the "small band of adventurers" aesthetic I like to keep in my games. Cohorts and followers would only slow down combat, and the party would become a small mob, half of whom would be NPCs controlled by the DM. That's not a game, that's a DM playing with himself. Alternately, the legend a character cultivates could be used to garner favor from the regions they have aided in some manner. If they require a teleport spell to a faraway land, a lord may be able to procure that for them. On the other end, a party with a poor reputation might find themselves the target of assassination attempts or over zealous corrupt law enforcers. What people think of the party is important, they do not exist in a vacuum where their actions do not matter.
A player of mine started DMing a game of his own, and he attempted an interesting idea where a city the main campaign took place in was controlled by a number of factions and guilds. He set up a complex system where they all were intertwined with each other and helping one faction in one way would gain favor with them and their allies, and lose favor with their enemies. Only some of the factions had secret allegiances and loyalty changes, so one could never tell who was an ally and who was an enemy at any time. But all knew the party. It was a fascinating idea, and one I could see leading to plenty of dark intrigues.
In the end, how fame and legend plays into your game is up to you. I enjoy bringing it into my game for no other reason than it opens the doors for more adventure ideas. No reason to restrict my creativity by not using it, and the more options I'm given, the better quality adventures I can come up with. I hope something I wrote was helpful to you. Thanks for reading, and stay tuned Monday for "M is for Megadungeon".
D&D 3.5 Leadership Feat
Pathfinder Leadership Feat