I've been playing it, and it's somewhat confusing, considering I don't know any japanese. I've got the core gameplay down, and am using Cloud as my main atm.
Basically, mash circle for a basic sword combo, hit square to use a special ability, hit X to jump, and triangle lets you climb or surf on various things around the stage. Like one level you fight in the second-last area of FF7, where you're surrounded by lifestream, and there's a bunch of rocks. You can wall-run all the way up the lifestream wall, you can surf on a strand of the lifestream like Tidus surfing on a cable in Yuna's Wedding FFX cutscene, and you can climb/wallrun up the various rocks. If you knock an enemy into the air, you can hit X(when it prompts you to) and pursue them midair to hit them with a slash or a special ability, but they can hit X at the right time to dodge it and retaliate the same way, making for a neat midair tug of war.(think Cloud vs Sephiroth in FF7 AC) Also, if you activate 'EX mode'(sound familiar?) and knock them into midair, you can hit square(when it prompts you via a HUGE icon) to initiate your limit break/overdrive. It differs from character to character. Cloud gets Omnislash, Squall gets Lionheart, Tidus gets the Jecht Shot, etc etc. As for actually inflicting damage...I can't bloody figure it out. Sometimes your attacks do damage, sometimes they don't. I don't see a recurring pattern, except that when your attack does major knockback(like a special attack or a combo-end), it does damage. Everything else seems pointless.
btw, you don't start with any of the villians. I'm not sure how to unlock them, but I have a feeling it has to do with the story mode that's in gibberish.