There certainly is a competitive Smash Bros world but it isn't so much about individual characters (though there are some characters that are flat out better or more versatile than others) as it is about the style of playing.
My friends and I had a rule that if someone is forced off an edge of a level, they're allowed to get back on land before being attacked. But I learned that a Japanese foreign exchange student I knew, that rule was unheard of and he had no problem aggressively going after opponents when they're trying to get back onto the level.
As far as I know, Ike/Soren support in PoR is the only thing that affects RD's story. Other than that, you can make Zihark join the Greil Mercs with Ilyana provided they have a bond support, and I have no idea what the Ike vs. Micaiah fight would be referring to.