One of the most mystifying elements of royal protocol to us "commoners" is the proper way to greet the royal family and how they greet each other. While no one is under obligation to curtsy or bow to a member of the royal family, the rules are still put into practice in court settings, like when the family is at a state function or celebrating Christmas in Sandringham. If the royal family is in the mood to follow strict protocol, everyone must either bow or curtsy to the Queen. Then, according to order of precedence, the order of who bows to whom goes down in order of the Queen's sons (by birth order, so oldest first), then her grandsons, her brothers, her uncles, her nephews, and lastly, her cousins. However, as third in line to the throne, William is said to have gained precedence over the Queen's younger sons in recent years. Female members of the royal family are given lower rank than male members, and until recently, wives of the sovereign's sons are typically given higher rank than her daughters and granddaughters. However, now "blood princesses" are given precedence over women who have married into the royal family. This rule only applies when the woman's husband is present, otherwise she gets bumped on down the list. These rules go down from the Queen to the lowliest baronet and also determine how members of the aristocracy enter and leave a room during formal occasions.
So, for example, if Kate and William were at an event together with William's grandmother, parents, and Princesses Anne, Eugenie, and Beatrice, Kate would only curtsy to the Queen, Prince Charles, and Camilla, Duchess of Cornwall, while Anne, Eugenie, and Beatrice would curtsy to her. However, if William was not present for some reason, Kate would have to curtsy to everyone, including "blood princesses" like Eugenie, Beatrice, and Anne. Confused yet? Let's not even get into how lower-ranking members of the aristocracy come into play.