First it sorts guilds into groups of 10 based on guild power (a variable determined by gold, upgrades, members, etc). Next, the system randomly matches guilds within each group with protection against getting the same guild 2 weeks in a row. Lastly, sometimes there are errors while matchmaking and guilds from one group don't get a proper warfare set up. In these cases the system throws them into the open pool for all guilds which haven't been match yet and may result in a high power guild being matched with a weaker one.
Regarding old/powerful guilds that are lacking player activity, it is the captain and officer's duty to get their members active or find new members. If that's not possible, then simply don't GW and the guild will go inactive the following week. If the leader rejoins warfare after going inactive it's highly likely that they'll be matched with a new/less powerful guild.
Group #1 (Top 10)
_______(regular drop outs)
The Wicked* (recently drops out due to guild leader leaving)
Heaven or Hell*
_________(Guilds who replace drops out otherwise in the lower bracket)
Sereneguardians* (often dropped out) (can be group 1 or 2)
New Game Order
The top of group are known but not their exact place so it's uncertain who would replace the lowest group 1 guild if they fell.
Group #2 (11-20) (can be #1 if enough drop out)
the 13th Legion
_________(dropped out but otherwise in group 2)
Brothers** (are often dropped out)
Guildorama (dropped out at current)
Creeping Doom (dropped out at current)
old school (dropped out)
Group #3 (21-30)
_______(Dropped out but otherwise in group 3)
South Park (Dropped out)
Rafel (Dropped out)
Abusement Park (dropped out)
Camelot (dropped out)
Group #4+ (31+) (rest of guilds)
No Guild TYVM
King of Titania
The Dawg pound
*This means an odd number in the group and the matches given are outside their normal range.
Absent guilds/very low ranked guilds will be either missed out or if necessary displayed below without a group value since after the top 40 these aren't easily seen. If a guild were suddenly to drop from say any of the groups out of the pool which would mean 0 activity they will lose that group but will be placed into group 0. Because if they return they will change the guilds and groups slightly due to other factors. When there is a drop out of pool in any group this often leaves a odd numbers which after matches are done the rest of the unmatched guilds goes into a Free for all.
Next to guilds are a estimation of their group if they were to opt in to gw again. Mostly their rankings won't be to much unaffected but their activity can drop this.