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Character advancement is free-form, with XP investment improving skills and attributes. Virtues are extremely difficult to improve, and shouldn't change much over the course of a typical game. Techniques range from new combat moves (such as the jump attack and sword beam) to unique racial talents (zora creating an electrical field) and passive abilities (being able to walk across shifting sand unhindered.) Most techniques have a skill or attribute prerequisite before they can be purchased. Certain races may recieve XP discounts or lower prerequisites for certain techniques.
Core races consist of Deku Scrub, Goron, Kokiri, Rito, Zora, Hylian, Gerudo and Sheikah, with more under discussion. Each race gets a couple nifty abilities (eg, Gorons can roll into a ball and roll around, Zora can breathe underwater, and so forth). Humans (which include Hylians, Gerudo and Sheikah) instead get a +1 to the Virtue of their choice (though this can't be applied to put any Virtue over the usual starting limit of 4), and get discounts on certain techniques associated with their race. No other races get any bonuses to Virtues. Each race also has a Mass score, which affects movement speed, getting knocked/pushed around, use of the hookshot/clawshot, and so forth.
Damage is measured in hearts, and can be dealt in fractions of up to 1/4 heart. Your character has hearts equal to 2 + Physical, making the minimum number of hearts 3. Hearts can be increased by increasing your Physical value, and by obtaining Pieces of Heart and Heart Containers, which will be distributed as rewards for beating bosses and tough puzzles and the like.
Magic spells and items use Magic Power (with a basic attack spell using 2MP.) The Magic Meter is divided into blocks, each with 6MP. Starting MP is equal to 6 x your Mental value, or one block per Mental. Additional blocks can be aquired by improving your mental score and as rewards (like Heart Containers)