"The Guest" is set in Algeria, which was at the time a French colony, so there are three groups at play in the story: the Arab Algerians (the arab), the European-Algerians (Balducci), and the French transplants (Daru), none of which trust each other.
Balducci is a gendarme, a military police officer who must obey the colonial command. He trusts Daru more that the arab. The prisoner is an Arab who has openly committed murder. In the end, he trusts Balducci's direct orders, taking himself to prison, rather than Daru's implicit orders, which leave him at apparent freedom. Daru is French, but he teaches colonial geography to Arab children. He is not in the military, so he tries to convince himself that he shouldn't feel obligated to either the colonialists or the arabs, even though Balducci thinks Daru is on his, the European, side. Daru wants to avoid making a choice, which as all philosophy students know, is never a good choice.
All three characters are caught in "the middle" of an existential crossroads of "freedom" versus "death." Balducci trusts a stranger to carry out his orders. Daru refuses to acknowledge his colonial obligation to deliver the prisoner. And the arab cannot decide which road to take because of external, cultural forces.
The irony of the story is that the arab takes himself to prison instead of choosing a life with the nomads. He would rather die at the hands of his enemies than be free. A professor in college taught us a caveat in the story: an arab must never dishonor his host. Since Daru fed and clothed him for the night, the Arab must carry out the wishes of his host. But what were Daru's wishes? Did Daru even know his own wishes?
Did Daru want the Arab to be free? Or did Daru wash his hands of the situation and abandon the arab on the road?
Either the arab misinterprets Daru's wishes (he thinks Daru abandons him to go to prison) or the arab protects Daru from the wrong decision himself (the arab appreciates Daru setting him free, but he cannot go to the nomads because such a decision would land Daru in prison instead of himself).
In the end, Camus says that most of us choose the road leading toward death, that we do not take personal responisbility for our freedoms; instead, it is easier to obey the laws and decisions of others.