To me it looks like they are still 2D sprites, but now placed at varying angles rather than always facing the camera as in XCX.

...That's not a sprite.  A srite used in this way is called a Billboard.  It's a sprite in the sense it is 2D and always faces the camera, but is fixed to a specific spot in a 3D space.  It's not a plane, which is just a flat, 2D mesh. 

The grass is made of planes, 2D meshes that bisect each other.  Fallout 3, 4, Skyrim, Final Fantasy XV, Witcher 3, Farcry 3, 4, Grand Theft Auto IV, V, and on and on use this exact method.  The only modern open world games that I know of that DON'T use this are Xenoblade Chronicles 1 and X (which use billboards) and Breath of the Wild (which uses meshes of some kind for every single blade of grass).   

In computer graphics, doesn't a "mesh" describe the vertices, edges, and faces that make up 3D geometry? That grass isn't 3D geometry, it is flat 2D planes.

Visually it just doesn't look impressive enough. That may well affect its sales when you see competing PS4 JRPGs like Ni no Kuni 2, Code Vein, KH3, SAO etc. The battle system is especially bad, it should be much more dynamic to appeal to a modern audience. Exploration looks as interesting as before but the world needs to be richer than XCX's. And Pyra doesn't seem playable, does she? (haven't watched the whole video but I'm wondering).

Bad presentation overall. My hypemeter went down for this game but I'll probably buy regardless.

A mesh is simply a 3D object made of vertices, edges, and face.  Whether it forms a square, spehere, or other multifaced closed geometric form is irrelevant.  These are grass meshes:  

This is a Skyrim grass mesh:

This is how the meshes look.  This is one where the individual planes that make up the mesh are visible:

You can walk around the mesh and so on, which is actually the bigges difference as Billboards have 1 side, meshes have multiple.  A billboard is 1 plane and only faces the camera.  It's a very big difference performance wise.  That's why the draw distance, though multiplied by 3 or 4 times in this demo vs E3, is still shorter than in XCX.  

Well on a technical level, I've stared at Ni No Kuni 2, it's nothing to write home about though it is aesthetically very very pretty.  Kingdom Hearts 3 certainly is impressive though.  Code Vein...hard to judge, some areas are technically impressive and others aren't.  Haven't looked at the new SAO.   And we still have no proper, quality direct feed videos at all.  Only cut sections of streams.  

And the battle system is not that far a departure from the current one in XCX, it just looks like it on the surface.  And it has a lot of layers to it.  If you didn't watch until later in the stream, you wouldn't have seen that.  And as I've pointed out before, this style of battle system has been enjoyed by many millions in various games.  

Pyra isn't a character per se.  She's a blade.  She's actually bound to your weapon.  You can have 3 blades active for each character.  Each blade has 3 arts slots and 1 special art.  The other characters are playable, that's shown in the E3 demo.  

In short, if you watch the whole presentation some of your concerns are addressed.  

IIRC, some of the bushes/shrubs in XCX looked like that, in that they were multiple intersecting 2D planes, though the actual tufts of grass were billboards.

Not *all* the folliage in XCX is a billboard, that would be some 1995 level nonsense :P .  There were some bushes in XCX that were meshes, which was better than XC where pretty much all the small bushes were billboards.  And XCX did refrain from using billboards in place of proper 2D planes for leaves on trees (which is how XC did it and was common in the early 7th gen).  But my point is that it's a significant step up, drastically increasing the polygonal density of the scene.  Trees are a more obvious step up.  XCX didn't have very good normal trees.  The trees here are more full with better,  more numerous leaf planes.  XCX skirted this by not having very many normal trees of notable size, instead yaving a lot of palms, giant fungi, and giant ferns.   

That's definitely a problem. If the game doesn't properly use well-designed characters like her, then there goes part of my future enjoyment of it. How many playable characters are there? I don't think we've seen the other main characters in detail in an article. Press coverage seems clearly lacking.

Breath of the Wild really has amazing grass and foliage for what is basically a Wii U game. I wish Xenoblade Chronicles 2 looked more like that.