"Sir" or "Lady" is prefixed to the names of people who have donated. It has no in-game significance.
Acceptable modes of address vary from realm to realm. Generally, "Sir" or "Dame" is acceptable for nobles without any particular position, and nobles with a position should be addressed by their title.
Then there's also the matter of "your Majesty" for monarchs, "your Grace" for Dukes, and other such modes of address, which, again, vary widely.
