The skills are absolutely not balanced all that well.
Sword is a very good beginner skill, since it offers solid damage and AoE. If you roll a good trait for the single-shot LMB, you can even get piercing on it. Summons are largely not that great.
Fire has a setup that makes it good for tanking. Blade can be turned into near-invulnerable facetanking. Sword+Wind movement can be rendered permanently invincible, if you need some build ideas.
Lightning is pretty fun since it has a chain lightning LMB that really chews through enemies.
Fist has a specific Fate that can let you create a Boss-OHKO build.
Finger seems like it has decent AoE and a fun movement ability that lets you get a crit. Sadly that really only matters for enemies.
Wind is by far the best movement technique. It makes you invulnerable for three seconds (traits can increase this) while you can still attack. It is incredible.
Water movement leaves a clone that aggros enemies, this can be useful against specific bosses.
Single hit damage seems generally better than AoE multi-hitters for one target, though this is just my rough impression.
Rarity is as follows: grey, green, blue, purple, orange, red. For skills, each higher tier of rarity has one more trait than the previous one. Attack skills also get boosts to their base damage. The difference is about double the damage from blue to red. This boost is very large and a major reason to try to upgrade to red skills. Passive skills similarly receive major base boosts. From blue to red, the difference is about 25% for the base value.
Never forget to upgrade your passives if you are able to. They provide absolutely massive boosts to your stats and keeping them upgraded becomes really important around area 3. You need skill points for them, from NPC interactions and Ascension Tournaments in Towns, see info below.
You can equip up to 8 different passives. You cannot use two passives that boost the same stat, but sometimes traits can boost stats the skill doesn’t.
The traits are a pretty big part of why red skills are king. Having more traits means more boosts, furthermore you can boost traits to the red, highest, level. Some of the traits are even critical for making builds work, good luck getting them to drop on skills you want.
Incidentally, around area 4 you will have to grind materials to cultivate skills since doing so through combat becomes prohibitive.
Rerolling traits (Comprehend) makes sense until more than half are of the highest tier of the skill. You probably won’t have enough reroll points to go much beyond that. You cannot change the nature of a trait, only the strength of the boost. Reroll points depend on your spirit roots and perception, which is why the latter is so important. Unlearning skills to free slots gives you some Comprehension stuff.
Item drops from world bosses can be rerolled, but the active skill that gets dropped depends on your highest spirit root (the passive does not). If you go with a single-element build, you absolutely want to make sure that it’s also your highest spirit root for a guaranteed source of red books. There are no other guaranteed sources. This is incidentally one of the major issues with upgrading your skills, pray for good RNG. There are a few events that permanently increase some of the spirit roots (elemental ones, wood, sometimes all the martial ones), so you may wish to keep a bit of a gap to counteract this.
The other source of red skills is the auction and the ultimate+passive set that the sect has. That’s it. Before region 3/4, you can do just fine with purple/orange on Normal though.
So you need these to equip more passive skills. There’re multiple ways to get them. All but the tournament happen as end-of-month event, but you can also trigger them manually.
You can look at the NPC section for the NPC interactions that grant knowledge you can transform into points. This tends to be slow and one interaction will give you about 3 skill points. Fastest is usual Training Partner over and over.
The last option is the triannual Ascension Tournament. Please look into the town section. I’d suggest participating as often as possible if you are at the appropriate tier. The skill fruits are a huge reward.
There is an exploit you can do with these. You must be part of a sect and ready to participate in the tournament. Normally, when you have ascended to the realm of the next region and you enter it, you will be kicked out of the sect and lose the right to participate, however… this event only happens at the end of the month. And teleportation talismans take no time.
You can indeed indefinitely teleport back, remain in your old sect while convenient, and sign up for a few tournaments while starting the grind of the next area. Gets tedious, but lets you score a few more skill fruits