NPCs might just be referred to in passing, @emit'd, or created as characters.
There are some guidelines for the use of NPCs. If these guidelines cannot be followed, the wizards should be consulted in advance.
Within an area (a single Hold, Hall, or Weyr), the guidelines for NPC use and creation are at the discretion of that area's leader. In general, it is best to ask the leaders if you intend to use an NPC extensively in your roleplay, via constant references, @emits, or creation. This is especially important with higher ranked NPCs.
In using NPCs from other areas, if the NPC you're thinking of using extensively is of a rank which you could not apply for and be granted upon first creating this character, you must ask permission from that area's leader. Therefore, you could name and @emit a cotholder from the Ruatha region, but not a Steward, or a Harper Journeyman, or a rider, without asking the leaders. There may, in the case of watchriders or closely allied crafts or such, be a standing agreement between areas about extensive use of NPCs.
In the case of NPCs from areas not currently open on PernMUSH, the same rule applies about rank, except that in the case of characters that could not be created during character description and background formulation in the Birthplace, permission must be sought from both the appropriate leader council, and the wizards. Generally speaking, if there is no leader willing to have that sort of character come from his/her area, it is a sign that the plot may be out of he 'normal' range for Pern or PernMUSH (there are exceptions).
Non-extensive use of characters in passing references is acceptable at all levels for all areas, although these should be vague, and not be a cornerstone of any plot. Generally, these references should not contain names, and must be 'ordinary' things. You might therefore say 'Lord Telgar was even enlisting traders for spring planting so we left' as background, but you should not say 'Derion, Lord Holder of Telgar, raped my wife.' since that is an unusual event, imposes a certain kind of personality on the NPC, and names the character. The idea is that using these characters as background fill-in and atmosphere is a good thing; focussing a lot of roleplay on them is not.
When an area on PernMUSH is closed, such as Lemos Hold, it reverts to being 'vague.' We do not want to impose later happenings on people's characters, so rather than referring to the specific leader that is no longer in charge, it's best to just avoid the reference. This can make it a bit tricky if you were related to those people by agreement when they were active, but they should be considered 'former' or 'retired' leaders.