Each nation has a navy. The navy has two levels, the unrated and the rated navy. All gamers can enter the navy as an unrated officer. They are issued a small ship and a budget for a crew and have to perform actions and pass exams to climb the ladder to the rank of unrated Captain.
As a Captain they can enter the rated navy only if they are selected by the Admiralty Board, which consists of Admirals and the Secretary of the Admiralty. The size of the rated navy depends on the budget that the government makes available and is organized in different fleets, consisting of squadrons.
Captains can be promoted to Frigates (6th rate), all the way to 1st rate ships of the line (or equivalent), with each step the Captain increases in rank. Ultimately one might command a squadron or a fleet and enter the Admiralty Board. Admirals are chosen from amongst the noble classes.
The government decides on war or peace, the Admiralty Board decides on naval strategy. They set fleet engagements, blockades, protect shipping lanes, hunt pirates and protect ports.