Metro_Pack
The familiar can communicate empathetically on a low level with it's master, to indicate that they're hungry, afraid, angry, etc.They can -not- chat it up telepathically with whoever is around like was suggested earlier.
(The italics are from the Rules of the Game Archive on the WOTC site.)
This particular module changes the rules somewhat, since familiars are supposed to be normal animals, that are magically enhanced, when they become a familiar. Why wouldn't outsiders be able to communicate more than a normal animal?
Some familiars (such as ravens and some improved familiars) have the ability to speak a language. Such familiars can use their empathic link power, but it still carries only basic emotions. The familiar can converse in the language the familiar knows (provided that the master also knows that language), but the two must be within normal speaking range to do so.
At 5th lvl, they can speak with their master correct?
The familiar and master can communicate verbally as if they were using a common language. Other creatures do not understand the communication. In effect, the master and familiar have their own private language.
Eavesdroppers can use spells such as tongues to understand a conversation between a master and familiar.
Speaking with the master is an extraordinary ability; using it usually is a free action, just as speaking is.
Familiars that can speak a language (or several languages) can converse with their masters normally if they choose. If they do so, anyone who overhears the conversation understands it, provided that the listener speaks the language used, just as with any other normal conversation.
Now I myself used the "ball of light" to chat up an attractive female. This being IC, for me. However, my character was doing this as a ventriloquist act. If that individual, or any other witness, thought otherwise, that is their fault. Do I really need to contact a DM when I want to RP a little? (Of course now this little trick is ruined for me, with anyone that reads this forum.)