Your Soul Name is the name for your account. It will function like a last name for your characters, and they share that soul. The name can only be between 2 - 8 characters long.
The Soul information, such as your progression of the main story and commitment of crime (theft or PK (player kill)), will be transferred to all characters you make even when you lose one via Permadeath.
Click the Create Soul button. From here you will be asked to create a Soul Password.