What are they even going to do after Breath of the wild though????

I was expecting that HD XCX game that leakers said were coming. None mentioned a sequel to Xenoblade iirc.

Actually, it could take place on the planet created at the end of the first Xenoblade Chronicles as the Homs, Nopon, and Machina expand their civilizations.  We clearly see Homs architecture in this trailer and what looks to be armor inspired by a combination of Machina and Homs armor design.  This could be a prequel though, if the Homs are the Samarrians of X.  Though that would mean it takes place centuries or thousands of years before X (depending on the nature of the recreation performed by ALVIS).  

It's a bit of a juxtaposition to see all anime characters in a non anime environment. Also, I could be wrong, but I'm guessing equipment changing is gone, at least that's the impression I get. It seems like a lower budget endevor which sucks in my book. Would have 1000 times over rather seen cleaned up 3d semi realistic character xcx models then anime models which doesn't require half the detail and textures. The whole peoject screams budget cuts, which is terrible, not great. 

Equipment changing being gone is hardly confirmed in this trailer.  I am willing to almost guarantee there will be frankly.  And this does not seem low budget AT ALL to me.  On a technical level, this is far above X, no matter what you think about the style of the characters.  You can't focus obsessively on the characters and ignore the detail everywhere else cause there's a lot more than in X.  And on that note, the art style of the game outside the characters the art style is almost bang on the money identical to the original Xenoblade.  The architecture, clutter, environments all resonate with that look.  Even the armor and clothes are fairly close in terms of their designs.  

This is more just another change in character designer.  Which is jarring to a degree but also not shocking.  They had a different one for Xenoblade than in the other Xeno games, a different one for X than Xenoblade, and now a different one again.  That, for me, is more unusual.  

Tbh the trailer is unimpressive and scaled down from X, so I can believe.

Looks pretty spot on UE4 to me as far as graphics and nothing really screams tons of time and care was placed in it to go to the next level graphically like X on Wii U. It's hard to believe a game looked that good and ran on wii u hardware.

No it's certainly not stock UE4.  I'm working with that engine and the base lighting doesn't look like that.  I highly doubt they are using it too.  Far more likely to be the X engine since that's already optimized for open world games and also Monolith is very familiar with it at this point.  Devs stick with what they know, especially with large projects.  It's why Bethesda is still using a Gamebryo version that has been modded out the ass specifically to make it work at higher levels of fidelity.  

I hope I'm wrong about a lot of things, customizations being the top concern, but my first impression is it's not very impressive. 

See I think my expectation from the trailer is also different.  I wasn't expecting anything more than a title, not a video.  Getting a little story and world tease was, for me, a huge surprise.  And I'm confident customization will be back, but probably more like the original Xenoblade.  In fact, I am with the GameXplain guys: I think Xenoblade Chronicles and Xenoblade Chronicles X may become two separate continuities followed by two separate game series that Monolith switches between.