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In World of Warcraft: The Burning Crusade, Shattrath City is the capital city of Outland for both the Alliance and the Horde.  The city is located in Terokkar Forest of Outland, and lead by the naaru A'dal.  Shattrath is a neutral "sanctuary" city, which prevents players of the opposite faction from attacking each other, even on PvP servers.  It also serves as the major hub for all high-level characters.  There are Master profession trainers, and portals that will teleport players to each major capital city, as well as the Isle of Quel'Danas.  However, while there are many different vendors and trainers, there are no class trainers, and no Auction House; players must use the Shattrath portals to return to the old world if they want to learn new skills or use the Action House.

In the upcoming expansion, World of Warcraft: Wrath of the Lich King, the neutral city Dalaran will serve a similar purpose in Northrend, with portals to every major city including Shattrath.  Unlike Dalaran though, there will be Horde and Alliance sections to the city, with guards keeping out members of the other faction.

The Aldor and the Scryers

Players have the option of aligning with one of two factions within Shattrath City: the Aldor and the Scryers.  The Aldor are a group of draenei priests fighting Illidan Stormrage, along with the rest of the Burning Legion.  The Scryers are a faction of blood elves that have defected from Prince Kael'thas Sunstrider, and aim to help rebuild Shattrath City and attempt to stop Kael'thas.  The two factions are at odds with each other; you can only be aligned with one group, as raising your reputation with one will lower your faction with the other.  Each faction has a quartermaster who will sell items to players with the appropriate faction level; the items offered are different between the Aldor and the Scryers.

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