Relationship

If you talk to sims and get positive feedback, you build relationship. You can tell if it goes up from a + sign. - sign means it went down.

Enemy
If your sim marks someone as their enemy they can always fight and bicker. You can only be enemies if your sim wants to.

Disliked
If you use the "mean" option enough, you and another sim will dislike each other.

Acquaitance
When you just meet a sim, you are their acquaitance.

Friend
Build up relationship, and you can make a friend. This opens a list of more options for your sim.