Friendly Fire is a term in Pillars of Eternity 2: Deadfire.
Many spells and abilities that cover an area of the battlefield can harm both enemies and allies.
If an ability lists an AoE radius, it affects everyone in the area. AoEs differentiated by Friendly or Foe descriptors affect those groups only.
However, even an ordinarily hostile AoE will not affect allies in the outer margin of the area provided by a high Intellect. You can use this outer margin to safely hit enemies while leaving your allies unharmed.
Friendly Fire Notes & Tips