Q. What does my legal status mean?
A. It's tough being the good guy. At some point, you're probably going to find yourself on the wrong side of the law. Just so you know how deep it's gotten, here is a list of the possible legal statuses and the consequences.

Clean:                          Goody two-shoes.

Mild Offender:                  You traded in contraband or (as an officer of
the police or navy) disobeyed orders. Authorities will demand to board your
vessel. If you don't cooperate, they will fire warning shots. If you persist,
you will be assigned Offender status.

Offender:                       You ran away from the law. Police (or
imperials, if you're in the Navy) will attack until you surrender.

Fugitive:                       You shot some innocent trader or cargo vessel.
Nice going. Now the police will shoot to kill. You may still be able to buy
your way out of this at a starbase or police station.

Outlaw:                         You attacked Imperial forces. You will be
attacked by all Imperial Navy vessels except starbases.

Traitor:                        You attacked a Federation base or trading
center. You will be attacked by starbases and defense batteries if your
ship is powerful enough to pose a threat. That's a bad thing. 
This is also the default legal status for Thargoids.