To be fair, I don't really touch Arcade mode cause my love for Dissidia comes from the deep customization systems. The real problem here is that your characters don't get access to all the equipment and abilities that make handling certain characters much easier.

Throwing into Normal mode real quick with Terra, I see they don't have her equipped with her more broken abilities and she's basically using her starting abilities... So yeah, the real problem here is that Arcade removes the customization system which greatly balances the game.