Mortal Kombat!
Battles in NWN2 are truly a well-executed concept. They should be, I suppose, since the same basic system has been in place since BG2. However, let me say it again anyhow - the battle engine is well done, polished, and behaves like it
should.
The system is, again, based off of AD&D v3.5 rules. For those of you still following along at home, this means it's turn based - but not quite like Final Fantasy style. Each character can do actions per round (not all actions require the same time), and a number of rounds make up a turn. However, everyone is doing their action
at the same time, with the only minor differences being made up by a factor called initiative. Therefore, a battle can get pretty chaotic - there are four party members and possibly a familiar or a summon under your control, and then the entire force whom you're fighting (which can be formidable whether it's one boss or several smaller creatures).
Fortunately, the system allows a pause command. In pause mode, you can devise your strategies, get your actions ready, and prepare to release general havoc. There is no limit to how often or how long you may pause during battle - a quick push of the space bar freezes time for you to manage your troops. This god-sent feature makes battles more about good planning and use of your abilities, and discourages just out and out bum-rushes with just a little quick thinking (fear not, there are plenty of times you'll need that, too).
Battles behave at a measured, sensible pace thanks to the D&D timing system, and most are a hard-fought victory. The AI of both your party and the enemy is respectable and even commendable at times. However, should you be a micro-manager like I am, you can disable it on your party for the most part, allowing you to maximise your control over the scene. I had one too many times where my characters used a spell that I'd prefer they didn't, and I was left without it when I needed it.

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I wanna cast a spell!
Spellcasting in NWN2 is much improved over the original. For starters, the interface is more manageable - the radial menus of NWN were unique, but not always very functional. Never was this more the case than with spells and character special abilities, which required you practically memorize their positions on the wheel and navigate through several layers. In NWN2, we go back to the traditional "spellbook" interface of BG2, along with a healthy quick-cast bar that has many different docks, each with 12 slots.
The spells themselves are some impressive graphics, easily the best looking things in the game. There is a large collection of them straight out of the AD&D Player's Guide, and for the most part they work as they're supposed to. Unfortunately, some spells have been slightly neutered to prevent balance issues, particularly some of the cleric's higher level spells.
Spell learning is implemented properly, with various classes learning and casting their spells in different ways. As well, you can take feats that allow you to create potions or scrolls for later use if you are a spellcaster, which can then be made simply by casting it on an empty bottle or parchment. These oft overlooked feats can be true lifesavers to the well-aware, as it's possible to truly expand your magic-user's powers in battle well beyond its design. On top of that, there's nothing stopping rogue characters from making use of the mage's trinkets. Normally, a character would have to stop advancing the rogue class for a while to pick up some mage ranks, therefore weakening thiefly abilities. A thief who can hide well in shadows as she casts fireball is one I don't want to be near.
Regenerating spells is a once-per-rest deal. At that time, wizards and clerics have the option to memorize different spells (if they've planned this before resting). Special powers granted by being a certain race or class will also recharge during this time.

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Taking a nap
Resting is a handy feature - not only does it recharge your spell selection, it also recharges your health. The only downside is that you can't rest just anywhere - if there are enemies anywhere near by, it won't allow you to at all. When you finally do, it takes 5 actual seconds (I'm not sure of the correlation to in-game time), and there is no penalty. Therefore, it's often recommended that you rest whenever possible.
There are also unintentional resting points - that is, where a character gets knocked out during battle. If you reach 0 hit points, the character falls unconscious (despite the little skull face, he or she is not actually dead). You can use particular spells to revive him or her, or you can simply wait until the battle is over - he or she will come back to life with a single hit point. At that point, you can rest up again and be on your way to more battles. You
are resting after each battle, right?