Okay I'll give you the full run down, bear with me.

If you've never played an MMORPG the battle system is going to be really foreign to you, on the other hand, if you have played one, it's going to be VERY familiar to you. Needless to say, the battle system is obviously based on the MMORPG idea, that is, everything takes place on the map you run around on, there is no traditional "battle screen" anymore.

The way this works is like this: You control one character at a time, the common misconception alot of people got is that you have no control over the other characters in your party, this is totally nonsense, you have COMPLETE control, at any time you can press a shoulder button and switch to another character and preform actions with them. They will use A.I. when you aren't currently controlling them, but it's A.I. You yourself set, for instance, if you set a character as an attacker he'll follow you into a battle and begin attacking the enemy until you tell him/her to do otherwise.

From what I understand you will earn a certain type of item that will allow you to choose from more A.I. scripts, I.E. you will earn a "Black Mage" item of this type and it will allow you to make the character cast black magic. This is only from what I understand though, the demo didn't make it very clear, as some scenarios you were able to use different A.I. scripts.

A typical battle will be like this: You're walking down a path and you see an enemy ahead of you, all of the sudden, the enemy hears, turns around and starts running for you. At this point you use a button to target the enemy and then set your character to engage the enemy (Just like engaging in MMORPGs) you will draw your weapons and then be able to select commands, "Attack" is no longer a command because it is automatic if you are in distance and not doing any other action (Just like an MMORPG) At this point you can tap over to your magic user and have him/her start casting a spell, for instance Libra, which is otherwise known as Scan. This spell isn't very high level so it will cast quickly, you then learn the enemy is weak vs. fire. You tap to your attacker and have him use a potion on himself, tap back to the magic user and have him/her cast Firaga. Because Firaga is a high level spell it will take a few seconds before it actually activates. The spell goes off, killing the enemy, you sheath your weapons and your experience points and spoils obtained will appear in a little box at the top of the screen (JUST LIKE MMORPGs)

This system makes battles MUCH quicker, and thus makes the areas much more expansive to compensate for the time gained. The system is (and I stress this) VERY EFFICIENT. Many people get discouraged when they play games like Final Fantasy IX because you're going through a dungeon trying to get somewhere, and then you get into a 4 minute fight and totally forget which direction you were going, etc. This new system really makes the game feel seamless and it is nothing but AWESOME walking into a boss room and having a boss come out taking up the whole room, fully in motion, it is BEAUTIFUL.

The battle system was lovely, but then again, the entire demo was. This game is going to be straight up amazing.