I have killed a ton of green wanted. what does this effect exactly ?
Depends on the faction they're from. If you're 'allied' with the same faction they are and you kill them, you're going to take a hit to your rep. Kill enough of them, you lose that allied rating and drop to friendly. You can mitigate that somewhat by picking up the bounty missions from the stations you're allied with, to kill pirates/smugglers in that system. Head over to the nav beacon and nuke any 'wanted' ships you find. Even though you killed a few ships that were allied with the same faction, turning in the mission nets you more rep than you likely lost for killing them.
You don't have to be specifically allied with them either. Killing ships affiliated with any given faction is going to be frowned upon by that faction, and is going to lower your rep with them. Taking that same bounty mission, and killing ships from the minor factions in your system will eventually net you an 'unfriendly' rep, or even 'hostile'.
Bottom line is, killing ships is taken seriously by the factions they're aligned with, and will effect your standing with them, and to some extent to the regional faction as well (Empire/Fed/Alliance). If you're a straight up pirate/bounty hunter type who doesn't do missions, and are indiscriminate about who you kill, you're eventually going to eliminate places you can land to refuel, rearm and repair, as well as upgrade modules or ships as the stations reflect that negative reputation.
