Fate of Io's battle system is nowhere near finalized, but here are some things to look for:
Integrated: Battles are not separate from normal gameplay. There are no transitions between battles and normal play. If an enemy is nearby, the characters may attack it, or they may ignore it (although the enemy probably won't ignore them). During battle, the characters can stop fighting and walk away if they'd like (although the enemy may give chase). There is simply no such thing as "battle mode" in Fate of Io.
Important: Battles do not occur randomly. Most (if not all) enemies in the game will be individually placed by the designers. A large percentage of battles will be significant to the plot line.
Tactics: Battles will involve complex tactics. Because they are not separate from normal gameplay, the characters will be able to use the terrain to their advantage. They may attack from a distance, set traps and ambushes, or even avoid the battle altogether, depending on the particular circumstances.
Challenging: Most battles will be life-threatening. A player who does not take a battle seriously will likely die. However, a cautious player who scouts out the enemy's location and devises decent plans will succeed most of the time.