It's about as far as it can go. When a character 'dies', they remain incapacitated until they are revived through a spell, or the party returns to a town level. You cannot permanently lose a character. If all your characters are incapacitated, though, you lose the game. But never becuase you screwed up.
All characters have custom skills, and they are unique.
When you level up, you have a choice of which skills to improve. By the later stages of the game, most players will have completely different skills for their characters and will play the game differently. There is exp. We're getting near the end, which is no secret. That's about all we can say about that.