You see, you're basically stripping enemies of their clothes for power ups. Your hero starts out with a Sparrow costume (the intro evokes Phantasy Star II, to me, just with the 'same dream every night' thing.) He gains this, logically enough, from a frog that tells him he's got to go through these castles, rescue some princesses, and free everyone from the evil Akuma.
Gameplay wise, it's fairly simple. You're in a 3D maze with a cruddy map (oh how I wish they'd provided little 'teleport here' symbols. Or even marked stairs). You go around looking for item boxes. Once they've been opened, all you'll find is an item box with a 'Surprise.' In these item boxes, there's things like presents (which add to a present icon in the corner of your status screen) or things that amount to keys to open new areas. You'll also find items. Each tower is ten floors, and the tenth floor is usually a mess of confusing hallways (first tower has moving floors on the tenth floor and warps, second has warps to get to each quadrant.) Once you get to the end of the tenth floor (usually a little box like area,) you'll find a boss. Amusingly, the boss is usually a wussy enemy compared to what you have been fighting. It's backed up by a horde of weaklings that seem slightly stronger than normal. (First boss was a giant chicken and a mess of chicks.)
Now, here's where things get odd. The first dungeon has 'Jail' areas. That's - not that surprising. At the end of the first dungeon, you get the green exit key. That'll open one huge area to get the red ring (it's hidden in the strip of floor two squares from the entrance.) Said red ring will pacify a whiny racoon. However, there's no sign of the key to access the jail.
Second tower (Pudding Tower) has pass through walls that are noticeable only by searching and getting told that there's wind blowing through the wall. There's also a section you can fall down into if you can find the relevant hole. Down the hole, there's a blue haired . . . man (?) dressed in a penguin costume. He/she seems to be completely insane, but joins your party if you let him. You don't get a key to the jail at the end of the Pudding tower. There is one floor that looks to have a huge unexplored area, but I haven't poked around it yet.
Other interesting details - some people won't talk to you (see the storage area for the wooden doll in the first tower) if you don't have enough presents. Perhaps Penguin lad won't join without sufficent presents.
You can make your own costumes by combining ones you have. The rules seem to be - defense is chest, speed is partly governed by feet, head holds your talent, punching is in the arms.