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Jumpin said:
I would have thought it would be more like past Takahashi game which had New Game+ modes where your progress in the story resets to the beginning, but you retain all your levels, skills, and a portion of items/resources collected.

It's a new playthrough so you start from the beginning only it probably won't overwrite your current playthrough, reason I think they'll do this is because in NG+ that are additional features like new rare blades that get unlocked with one in particular gaining a L4 as well as the ability to send primary blades like Pyra on Merc mission and such.