This magical story of fairytale-like creatures and dead people revolves around two characters, Ellen and Keats.
Although you won't be equipping your characters with powerful armor or weapons, there are ways to fight the strange Folk from the Netherworld. Your character can equip up to four Folk at the same time, assigning each to one of the A, B, X and Y buttons. To capture other Folk you must beat them up until their Id appears (a red spirit) and then absorb it. The more you absorb or use the same Folk, the more powerful it becomes. By absorbing the same one over and over you can improve its abilities as well.
To attack with a particular Folk, you press the respective button. To absorb the Folk's powers, you use the controller to pull them out, but there are other ways to use the motion sensor with other more powerful Folk, called Folklore (they're like mini-bosses and bosses). In these cases, there will be a meter that shows how close you are to absorb that Id, and usually what you have to do is explained. Sometimes you have to pull it out by quickly lifting the controller when the spirit turns red, other times you will have to beat it out of them by tilting the controller from side to side rhythmically, or you will have to tilt it in the opposite direction the spirit is trying to go to keep it in the center, even repeatedly shake and stop as its color changes. In more complicated fights, you will have to do all of the above in turn.
Although Keats and Ellen's journey takes place in the same town and the same Netherworld, their stories are different. If you're planning to play with both, know that the decisions you make in one character's storyline will impact the path of the other character.