Challenge And Fighting
So, combat, or "That thing you probably shouldn't be doing too much of, if you can help it." Combat begins when "violence becomes inevitable", and ends when one side is totally defeated or escapes. Nothing too surprising there. The game's battlefield is a bit of an abstraction, as there are only four zones the game considers worth contemplating. The party's front and back areas, and the enemy's front and back areas.
The very first order of business is for characters to roll initiative to see where they end up in the turn order. Monsters never roll, they have a fixed initiative in their stat block. The being who has the highest initiative goes first, with everyone else following in order from highest to lowest. Initiative actually has a secondary function, in that it's also your dodge value- your initiative is also the number that enemies need to match or beat in order to hit you. What shields do is put a "floor" on your dodge value- if a character has, say, a heavy shield, but rolls a four on initiative, they still go on four, but they would use the shield's dodge value of nine instead of their initiative roll, because it's lower than the shield's value.
The second part is assigning objects, usually around five. These pieces of battlefield scenery are placed by the players, and if a player describes an attack as using one of these objects to assist them, they get an accuracy bonus, and the object is used up.
The actions a character can take aren't too out there, and each character only gets one. There's movement between front and back rows, choosing to reroll their own initiative, cast normal spells, attack, defend to reduce incoming damage a bit and possibly cover other party members from attack, use items, and possibly use certain skills. At level 2, characters can take a turn to add a new object to the field, as well as feint, which is an attack roll made against an opponent's Condition which, if successful, reduces their Initiative. Incoming physical damage is reduced by the target's Defense points, which the characters can increase by using spells or wearing armor. Most offensive spells have to beat the target's Condition score in order to take effect or deal damage, except when noted.
Characters fall unconscious when they reach 0 HP or 0 MP, so casting yourself dry does have its own consequences, and there's a section of what recovers HP and how much, all of which has been gone over in other sections but is included here as a handy summary. A character has a number of negative HP equal to what they rolled for their condition that day- Matt Sanchez has talked about one session that his character only survived because he had eaten delicious food the previous day.
Beyond that, there are only a couple of things. The first part is running away, which the PCs can do whenever their sum initiative count is equal to or higher than the sum of the enemy's Initiative- which means that the more characters there are standing as opposed to the enemy, the easier it is to get away and avoid being trapped. The second is that characters can roll knowledge against the terrain+weather to find out what a monster's general capabilities and stats are, but for the real hard numbers, there's a spell for that.
Next up: Setting creation.