I solved this whole Law, Neutral, Chaos, Good, Neutral, Evil thing in grad school.
Your view on law, neutrality, and chaos are derived from whether you align yourself with "act" or "rule" based codes of coduct. The act-based moral agent considers only the results or consequences of the single act while the rule-based moral agent considers the consequences that result of following a rule of conduct.
An act-based agent is "chaotic". A rule-based agent is "lawful". Chaotic agents make determinations on an act-by-act basis. "In this case, lying about whether or not I'm hiding Jews in my house will save lives." Lawful agents make determinations on a rule basis. "Lying, as a rule, is wrong." Neutral agents are "rule of thumb" based, or "rules with exceptions".
Good, neutral, and evil are determined by the scope of your "circle of morality". Ethicist Peter Singer describes morality as "as an expanding circle which begins with the individual, then embraces the family and soon the circle includes first a class, then a nation, then a coalition of nations, then all humanity, and finally, its influence is felt in the dealings of man with the animal world".
A Good person concerns himself with a very broad circle, such as "the world" or "living things" or "all good creatures". His level of concern does not decrease much as it radiates outward; he is likely to risk his own life to save a stranger or a stray dog.
An Evil person concerns himself with a very small circle, such as "himself and people personally valuable to him" and his level of concern decreases sharply as it radiates outward. He might risk his life to save his wife, probably wouldn't to save a friend, and certainly wouldn't to save a stranger (unless a reward, etc. made it worthwhile).
A Neutral person concerns himself with a modest circle, such as "himself, family, friends, and community" and his level of concern decreases modestly as it radiates outward. He is selfish, but treats friends and family with fairness, and might risk his life to help his community, but probably wouldn't to save a perfect stranger.
In short, Good/evil determines FOR WHOM you care about the consequences of an act, and Law/chaos determines HOW you evaluate the consequences (as an act or as a rule of action).
All the D&D alignments make perfect sense under this system and it's really easy to apply.
MOST people are Neutral-Neutral. Most of us live our lives with moral rules of thumb, but occasionally evaluate our choices on a case-by-case basis. Most of us worry about ourselves, our friends, and our family, but don't worry too much about starving strangers in far-off places, or if we do, only a little.
"Lawful Evil" people follow rules that they believe will lead them to gain. So they may have a rule "don't lie, because a reputation for honor is valuable" and they will abide by it. And we all know some chaotic people. These are the ones that will lie "as long as no one gets hurt". They follow no rules except that in any given choice, they will choose whatever act gets their circle the best consequence. etc.
D&D 4 got rid of this system just as I had it figured out, dammit.
