Gameplay
As the player, you control only one character and are allowed a single companion who does his own thing automatically. The companion can be told to engage in active mode or passive mode. In active mode, he fights like you do, while in passive mode the character will generally give up some bonus, like Chi recharging or extra damage when wielding a weapon. In fact, even with the very simple skills and stats system, the game won't permit the player to handle the levelling of his party members.
Character progress is very similar to Knights of the Old Republic - based on stats and experience. There are fewer character stats to modify but more skills. The skills are each sub-divided into three upgrade paths. For martial skills, these will include a speed bonus, a damage bonus and a chi bonus (where the player gets extra damage if he expends chi). There are five kinds of skills - martial, magic weapons, support and transformation. Martial skills are your basic hand-to-hand combat, weapons skills use a weapon for extra damage but drain Focus. Magic skills drain chi, but generally permit ranged attacks through the use of magic. Support skills do no damage but have beneficient side effects, like slowing the enemy, shocking him in place, or stealing his chi. Finally, transformation skills permit the player to shapechange into certain beasts that he has defeated.
All in all though, it's a remarkably simple system - too simple. There's little need to develop more than one martial, magic, and weapon attack. There are two good support attacks worth getting - one thunder one which shocks enemies and freezes them in place, and the spirit thief to recharge your chi. Everything else is superfluous.
Combat
The combat system is also very simple. Basic attacks are generally quick. Power attacks break through blocking. There are dodge moves to avoid power attacks. Each kind of combat skill is capable of a basic or power attack. Chi can be used to do extra damage, and Focus mode is like Force Speed - your character becomes super quick and the game slows down so the player can keep up with him. Certain kinds of enemies have certain invulernabilities - some, like golems, may be immune to martial and support attacks, but vulnerable to weapons. Others are immune and vulnerable to other kinds of attacks - you get the idea. Jade Empire's combat is definitely preferable to the KOTOR system of basically watching the fight happen, but because there is only one character it lacks the tactical depth of combat.
In terms of twitch action, it's really too simple and not all that satisfying. The tactics and strategies are too obvious, and there are clear exploits that just abuse the AI. The shocking attack is deadly even against the final boss, who, if you remember to keep hitting him with it between your regular attacks, won't be able to move. Against groups, it's all a matter of using area attacks if you're in trouble and dodging a lot while picking on one foe at a time until he's down.