Cross-realm grouping, introduced between Patch 4.2.0a and Patch 4.2.2, is the ability to invite a character from another realm (of the same faction) to your party while in an instance if they are connected to the party leader by Real ID. It may be a paid service at a future date, but currently is a free feature of the Real ID system.
If the party members enter an instance in a high population zone (like Ragefire Chasm or Stockades), they will be able to see each other.
Despite hotfixes for daily quests in cross-realm zones, as of Patch 5.1, different realms may have different sets of daily quests for various factions, such that spawns for quests may not appear if the leader of the party does not have those quests available. This problem is especially bad in Pandaria dailies.
Example: Party leader has quest A available for Golden Lotus dailies on their realm, but a party member has quest B available on their realm. The party member may not be able to see mob or object spawns for their quest until they become the party leader.
If a member of the party can't see a mob, it may only appear when a member of the party that can see it attacks it or goes in combat with it.
Sometimes a member of the party will not be able to attack a mob that is not part of a quest active on their realm, even if another party member on another realm can see and attack it.