Each character has its own set of skills, each having its own level. A character can equip items, with different types of items taking up a different slot within the equipment panel. For example, a Dragon defender will go to the Offhand slot and an Amulet of strength will go to the Neck slot. Some items require a certain level, mode, and/or status to equip, notably armor and some weapons (ex. Sir Owen's longsword requires you to be in mode: Extreme).
You can design and alter your own appearance within the game. If you are not satisfied, you can talk to the Make-over Mage and she will let you alter your appearance yet again.