Character Battle Abilities
Hit the back button, and this will take you to the Ability screen, where you can set the character's battle abilities. You can also access this from the main character junction screen by scrolling over to Ability.
At this stage in the game, there are four abilities available to you, but only three slots to put them in.
The magic ability allows you to use magic spells that the character has stocked, such as Blizzard, Scan, Double, Cure, etc. Since magic spells are much easier to obtain, most of your magic based damage as well as cures and negative effect removing will be done with magic spells.
The GF ability allows you to summon one of the character's junctioned Guardian Forces during battle. When channeling the summon, the character's health pool is replaced by that of the Guardian Force's, which can save the character from death in rough situations. When the summon casts, the GF uses a massive cinematic attack that will hit all enemies. GFs are almost always element based, so their main attacks are as well. For example, Shiva uses an Ice attack and Quetzalcoatl uses a Thunder attack.
The draw ability allows the character to draw magic spells and occasionally other things from the enemies. Once Draw is selected during battle the character can choose to immediately cast that spell, or stock it. Draw is not always successful. You will often find new spells by drawing from enemies, which can be quite powerful. You also can draw other things, such as a new Guardian Force. This makes Draw a very desirable ability to have on at least one, and preferably two or all three of the characters in your party.
Items come in all shapes, sizes, types, and purposes. In battle you mainly only have access to items such as Remedy or Potion, used to remove negative effects and restore health, respectively. Later in the game you may receive Stones which are equivilent to various magic spells. Typically, you won't need to use the Item ability once you've stocked a variety of spells, but early in the game it isn't a bad idea to let at least one of your characters have it.
In the beginning of the game, when Squall is your only character, set him up with Magic, GF, and Draw.
You'll notice that under the three battle abilities is another area. Once your GFs learn certain abilities you can put stat effects here, such as Magic+20%, or HP+20%, etc. These are passive effects that will change the junctioned characters stats or damage.