Kiwami 2 is somewhat different to 0 and kiwami 1 in how it plays. For one, shops and battles blend seamlessly with the "overworld". Civilians still exist rather than just fading out and appearing as a border, so they actually run to the edges to watch or hide behind cover, fights can spill out of, OR INTO shops without a cutscene, and after it all continues on without loading screens or transitions.
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Now, the way you level up skills is different too, as is food and drink. Now you can get temporary buffs from vending machine drinks, and you have five different types of xp. Strength, stamina, knowledge, toughness and spirit I guess. Each food and drink item has certain xp values for each of these, and if you are full, you gain no xp. Also certain combos of food you can eat at a restaurant give additional buffs too! It's very cool.
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This does however make it a bit harder to level up and is a bit more complicated but it's really neat to see and really incentivises making sure you eat and drink the right things... Though you absolutely can just go around punching fools in the face all day if you prefer. It just takes longer :3
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Also completing missions, sub stories and challenges gets you various chunks of xp and there are hidden candies that give a huge xp boost for the colour of xp they are for. Pretty neat! Kiryu's got a bunch of cool moves that AREN'T heat actions now too, which is great fun, and more moves get unlocked too, but it does feel like there's not as much you can do at the start now which is a shame.
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Oh I haven't got it to work yet but there are allies in the game which are NPC's which hang out at particular spots, and if you finish the sub story for them and unlock their heat action via xp, doing a heat action near them plays a specific cutscene and does gigantic damage!
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Final thing, there are so many more minigames too! SO many! Omg. Virtual-on, virtua fighter 2.1, GOLF, that's just the new ones in sotenbori too! Darts is improved and both more challenging AND easier at the same time. It's hard to explain, but it's easier to understand how to play and aim, so it's less luck based, but it's also more floaty and harder to get the timing right for a perfect throw.
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This leads to an extremely immersive experience and cool things like shopkeepers peeking up from behind the counter after a fight is done. The arena ring is still there, there's still a border to the fight, but it's very well hidden and more organically and naturally formed.