Karma works as "some sort" of forum reputation. If you do good actions, help other users, bring discussions to the threads etc. Users are able to "nuzzle" the given user and give them +1 in karma. If a user spam posts, post rude comments or just do something that is not liked, they might get a "bite" which results in -1 karma.
It's pretty much there as a more fun addition to the forum for the users to use and does not by any means give you any advantages on the site or game.
From a few weeks back, users registering on the forum must reach a certain amount of posts before they can nuzzle/bite, if you are active the option will show up for anyone.
