On what HappyDaze and Pat are discussing, I could divide this into three basic cases:
(1) There is absolute good and evil, and everyone believes in it. The evil creatures are like "I'm evil and I know it" while the good creatures know they are good. It's simplistic, and that's the point. The world law is that evil beings know they are evil.
(2) There are differing cultural attitudes about good and evil, with various shades of grey, and no alignment system.
(3) There is absolute good and evil, but there is cultural complexity and some cultures are verifiably evil by the alignment system but still think of themselves as good.
I'm not sure I see the point of #3. If there is moral complexity to the world and its cultures, then why have a simplistic absolute alignment system?
(As an aside, less quoting would make things more readable, I think. More than two nested quotes is getting excessive, in my opinion.)