Honor is player based. Usialy when you are sending an attack it will tell you if you will lose honor and how much you will lose. The honor drops when the attack hits your target. So if you withdraw your attack before you hit it won't drop. The more your honor goes down the more you production goes down. The last I knew you lose honor when you attack some one that is 25% or more smaller than you. The amount of runes you have in you village not used in building also count's to your value but it won't show on your value. I think it is either 30 or 60 per rune added to your value.
Your honor will increase over time back to 100.
Edit: Can someone post the link to the french server so if someone wants to play or go help over there they can.