Guard
Guarding is the action of actively blocking moves and attacks. There are two types of guarding - standing guard and crouching guard.
Standing guard
Standing guard blocks high and mid attacks, but does not block low attacks, and can be thrown and overcome by high guard break moves.
Crouching guard
Crouching guard blocks low attacks and high crushes highs and throws as you are in the crouching state. Crouching under highs and throws can be done instantly even when under normal guardable recovery (for example +G frames), except when forced to standing position through the generic running power crush tackle, or through projectiles.
Guardable recovery
Some recovery animations in the game force you into guardable recovery where your freedom of actions is severely limited. Under guardable recovery one: Can't activate blocking through neutral guard Can't low parry as it requires you to be free to act in order to low parry the next colliding active frame of a low parriable move. Can't make a generic d/f+2 uppercut not launch you on a crouching hit (normally they do not launch when they hit on Normal Hit on a crouching opponent but only give slight plus frames and an aerial state for the victim which enables for instance ground hitting moves to be used)
Forced standing guard example
As an example of this forced standing position, Geese can setup an unavoidable Rashomon Rage Art through the use of gaining +20 frames either through a meaty enough running armor tackle or an EX Shippuuken air fireball while in Max Mode.
Neutral Guard
Just like in a real fight, keeping your guard up requires presence of mind. After being hit, you stop blocking unless you're holding a back directional input or the string jails. Some powerful moves can break neutral guard even on block, such as Heihachi's u/f+3,4. This means if you block the first hit but aren't holding back for the second, the second will hit you. This can cause you to get hit while backdashing, since tapping back-back isn't holding back.
For crouch guard there is no known difference in blocking by holding down or downback.
Neutral Guard Activation
Activation of standing neutral guard varies wildly based on the move in question. For example, with Lee, against bot set to «Stand» for «CPU Opponent Action 1» and «Neutral Guard» for «CPU Opponent Action 2»: After d/b+2 (+7), ws3 (i10) is blocked, implying it takes fewer than 3 frames. After 2,1 (+6), 1 (i10) hits but 4 (i11) is blocked, implying it takes 4 frames. After 1 (+8), d/f+1 (i13) hits but 3 (i14) is blocked, implying it takes 5 frames. Credit: RogerDodger
Neutral Guard application
In practise 99.9% of cases you should not be using neutral guard, but instead use holding back to block standing, or down or downback for crouch guard. In some cases pushback can be reduced by blocking a move in neutral guard, which can make certain long range punishers possible or easier. For example Heihachi's f,F+2 is -16 with pushback and lots of characters can't punish it at all unless certain conditions are met like neutral guarding it or it being blocked when one player's back is next to the wall or move being blocked off-axis.