Skies of Arcadia is a role-playing video game with an emphasis on world exploration. Gameplay is similar to early Final Fantasy and Dragon Quest games; the player engages enemies in turn-based battles to earn experience points, making their characters stronger. The overworld is divided into six regions, traversed by flying airships in 3D space; "Discoveries", hidden locations, reward the player with extra benefits. The world map starts out blank, and it is up to the player to chart the map through exploration. The player may also recruit characters they encounter in exploration, allowing them to be placed on the ship or base's staff, adding extra benefits to exploration or battle.
When docked on landmasses or warships, exploration occurs on foot. There, gameplay alternates between exploring cities and progressing through the game's dungeons. Cities are visited to buy equipment to make character's stronger, and interact with non-playable characters to progress the story. The dungeons exist in the format of a maze, with the player navigating the characters through it to obtain beneficial items in treasure chests while taking on enemies in random battles. Getting through the end of the maze generally culminates in a last boss battle to be won prior to exiting.
The developer, Overworks, made conscious decisions to make entering individual buildings in towns seamless, without loading, and to use an expressive, anime art style to more clearly show facial expressions and emotions of characters, both of which they felt had been lacking from recent popular RPGs such as Final Fantasy VII and Final Fantasy VIII. Similarly, while the aforementioned games were focused on dark themes and complicated gameplay systems, Overworks strove to keep the game bright and cheerful, with simple gameplay mechanics that focused on exploring a large game world. The game was released across two of Sega's proprietary GD-Rom discs, to accommodate its size.