A whole lot of interesting back and forth between the 2 companies this generation, the good kind too!
Notice how many of Square Enix's best selling titles have been on Nintendo systems.
Kingdom Hearts: Dream Drop Distance
Dragon Quests VII and VIII - Both of which are getting international releases
Bravely Default, and soon Bravely Second is coming.
And Nintendo has been highlighting many of their games in their own Directs including the above mentioned.

Plus, there's also the fact how Square Enix let a little word slip about NX, and the possibility of Dragon Quest XI appearing on it. They of course had to keep quiet about it by Nintendo. But the possibility is now out there.

So clearly they've got a good relationship going, but as if that wasn't enough:
Cloud Strife, one of the most iconic video game characters on the planet and the poster boy of Square Enix's most popular and successful franchise, Final Fantasy, is now going to appear as a playable DLC fighter in Super Smash Bros. 4! Cloud is actually going to duke it out with Mario, Link, and co. after all these years!!!
Just what does this all mean as far as the two companies working together goes?
With NX just around the horizon, and given how one of the Wii U's glaring issues has been a severe lack of 3rd party support, Nintendo is trying to address that issue, and they appear to have gotten Square Enix on their side.
Could we see even more Square Enix characters in Smash Bros. like: Sora? some Dragon Quest character? Geno from Super Mario RPG?
Square Enix appears to be eager to support the NX, whatever it might be.
So the question is: What exactly going on between Nintendo and Square Enix?

Square Enix has always supported Nintendo. Crystal Chronicles was Nintendo's own exclusive slice of the Final Fantasy pie, as well as Dragon Quest for he most part.

Square Enix is always looking to maximize the amount of sales. Just compare the number of SE games on Wii U with the 3DS and then compare the install base. The same reason it's throwing everything at PS4 right now and why they still embrace mobile over everything.
Trust me, if the 3DS had similar sales as the Wii U, most if not all games for 3DS would've been released on mobile or even Vita.

SE doesn't love Nintendo, it loves sales.

Oh, and Sony.

It's splatoon all over again. Oh the horror 😦

Square and Enix owes their success partly to Nintendo. So they made a strong bond, that will most likely never be severed completely.

No, Cloud in Smash doesn't mean anything, besides SE making a quick buck on the back of a successful established IP ofc.

For sure they will support the 3DS. Why wouldn't they? 3DS user-base is large enough to justify porting any RPG.

But where is the Wii U support? Exactly. If the NX performs isn't a runaway success don't expect much. Hopefully, it will do a lot better and SE will be on board.

What it means is that fans voted for Cloud in the ballot and Square isn't stupid enough to not allow their most iconic character to appear in the most iconic crossover in the industry.

*eyeroll*

1. Kingdon Hearts has been appearing on Nintendo handhelds since the GBA. How many console titles that resulted in?
2. Dragon Quest goes to most popular consoles. The End.
3 Back to handhelds, while SE did abandon Nintendo consoles, they never left handhelds and developed new IP's for everyone since the original GB
4. Cloud in Smash? Ok, so was Ryu but no Street Fighter, Snake but no MGS.

Cloud is in smash for the same reasons Sonic/Ryu/snake are.Ionic Japanese figures loved internationallt as well. Money and marketing for everyone. Nintendo gets to reap off the FFVII hype.

Nx Success is the only obstacle that decides if SE or anybody will support.Dont spin shit - USE HISTORY. It shows patterns, and pattern says... nothing out of the ordinary.

Agreed, the US and Europe gets one year old Japanese Square Enix games and now everything is on the table...craziness.

Now that you mention it, SE has supported Ninten not too badly as of late, with a lot more games made available from them already. Hopefully it gets even better and they give us more games.