What is this world alliance thing, and how does it
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Yes. Some lower populated servers were combined to increase the community. Depending on which world you sign into of the allied servers results in which characters you play on and which storage systems you use. For example, I can sign onto Galacia but cannot access my storage or characters for El Nido, unless I sign onto El Nido.
Just be sure to go to a place where no one else is likely to be to drop your stuff. Before the alliance, I used to safely drop items behind a tree in Ardentmill, but since then, every channel will have someone entering or walking about or idling in there.