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It's darwinistic before darwin.

Everyone goes their own path and does their own thing on a simple agreement that none shall force anything on anyone.

There are better paths and worse paths, those who take the better paths will prosper and influence others to follow their example, creating traditions, those who take the worse paths will suffer and influence others to avoid acting as they did, creating taboos.

Conventions then replace laws as the things which govern human behavior.

It's like that anime where a girl arrives in a walled-off city where there are no laws, the state was overthrown and there is a permanent state of anarchy, without any police or courts or prisons. It's a forever purge, 24/7 lawless amoral anarchy.

She expects a rundown chaotic hellhole of constant warfare, but when she arrives in the city she is surprised to see the exact opposite, everything is in fact better than the cities that still have governments, everything is clean, people are friendly, polite, and always willing to help each other out however they can, it's not just a nice place but a seemingly perfect one, at least for the first day.

But then she notices something, everyone is in peak physical condition, the boys practice fighting as their go to form of play, the girls are always accompanied by boys just as women are with their husbands, last is that everyone is armed to the teeth, carrying guns around, and never too far from a firearm, when the topic of conversation turns to the matter of violence they don't shy away from it, they talk about killing casually as if it were no big thing to kill.

All this despite never once seeing any hint of violence, even when in altercations, the people tend to do all they can to resolve the situation peacefully, in such situations the people who seem always prepared to take a life will all of a sudden seem like doormats who detest even the mere existence of the slightest presence of hard feelings between people, even more averse to harsh words than most cities' dwellers are.

The girls asks them why they don't just do whatever they want if there are no laws and everything is permitted, they say they might if they wanted to, but in such a society there's little difference between the activities one could engage in, and they simply preferred to keep their interactions with others as civil as they could be, which means if he wants something that belongs to someone else, he's going to get it by paying for it, and only if they are willing to sell, otherwise he goes to try to get a similar item from someone or somewhere else, not because he's being fored to or threatened into doing so, but because he prefers how things work out when people respect each other's ownership rights.

One day someone else does try to steal, a man from the outside holds her a gunpoint and says that she can either give him all she has or she could be gunned down by him right there in the street. Immediately the entire population of the crowd kills him, making it apparent why everyone was so nice to everybody else, because at the end of a society committed to having a lack of government, any and all offenses against others or their property is immediately punished on the spot by execution.

Turns out that back when the city was founded by a group of criminals who wanted to live in the absence of any state, they resolved any conflicts or problems directly, it really did turn into the warzone that the girl had expected it would, and the idea of establishing a government with laws and enforcement did come up, but was ultimately rejected as the very concept of things such as a justice system was still strongly opposed by enough of the residents that the ones who suggested it were immediately disposed of by everyone else.

however, the way things were going was also unsustainable, so the criminals turned colonists decided upon a set of policies that kept everything more orderly and peaceful, everyone would leave everybody else and their property alone and all who broke this informal rule would be put down for the sake of preserving the common peace + order, as a result the city transformed into the most peaceful city in the world, also the most law abiding given that in the absence of laws there was no possible way to break laws that didn't exist. Note that as an informal rule rather than a law, it's enforcement was freely up to the discretion of those involved, if someone was such a dickbag that people generally agreed that it was better if they were to be killed, they might all decide to turn a blind eye to the guy who finally plugs the asshole.

But someone just doing a mugging at gunpoint in broad daylight right in front of the entire town? they must have a deathwish.

That's the endgame of abandoning the government, law, religion, morals, etc. as the chaos is not sustainable, either society will reform itself when people lose faith in lacking a centralized institution entrusted with a monopoly on force, or if enough people or the people with enough power/influence are especially committed to anarchy there will instead be a new paradigm for keeping peace and order, which is to create a barebones set of rules most would associate with the non-aggression, and have the loose policy of physically removing violators of these rules and the "bad neighbors" (who everyone despises despite them following the rules of the NAP) when they arise.

This is the wild west where people shoot each other for cheating at cards, but for the most part it is a very peaceful and civil society full of polite and kindly citizens that do everything to avoid incurring bad feelings in other towards themselves.

It's a dystopia, like all the other cities in the series, but the point is that the dystopic nature of such a city would ultimately be a society were people respect each other out of self interest, since failing to do so might result in death since it is out of self interest for the society to punish those who break the rules of conduct they've adopted. it's a good reason to pay attention to the local culture and etiquette when visiting someplace in a prolonged state of anarchy, in the absence of laws there must still be a way to deal with those who cause trouble, without a justice system or prisons, the sentence for serious offenses is likely to be swift, brutal, and final.

There's a reason warrior and honor cultures are usually the most polite and traditional.

You're definitely not White, you're clearly not very bright.