I haven't played much too much of TotFL, buuuuut...
1) Combat's pretty cool. It does a first-person kind of thing. There are
different tactical abilities based on party formation, and these are based partly around another mechanic: party member trust. One thing that stands out is that you gain party members in JRPG format, and they have their own personalities.
2) Yes and no. You create your own custom character at the start, and gain them throughout play. Your first characters will be a Fighter, Priest and even a Ninja, and you'll gain a Thief before too long. I think you can create custom characters after a certain point to replace permadead allies, but I'm not certain.
3) I believe there are sidequests, yes. The dungeon on the first floor is somewhat linear IIRC, but it mainly revolves around showing you the different mechanics.
Some bits diverge from the classic Wizardry experience, other than the formation attacks and premade characters -- the Grim Reaper will chase you at certain points, and can curse characters into instant permadeath if they die while cursed. You can learn spells with certain magic gemstones, and different monster loot can be used to do so. Some "undead" enemies require magic weapons to kill, like in old-school D&D.
4) Yes. This Wizardry is probably the most involved with a plotline. I dare say it's closer to a JRPG in some ways than other entries in the series.
So, yeah. Figured I'd give you a more thorough answer than what was given so far. Like I linked with answer #1, there is
a guide / "shrine" / proto-wiki thing that breaks down parts of the game on RPGClassics, if you don't mind some stuff being spoiled.
