* Note: A bunch of concepts need to be explained before a timeline will make sense. I'll present as few terms as I can as they're tedious to read. *
Seithr (魔素 Maso: Magic Element): Seithr is an invisible substance that has always been present in the world. It is harmless to living things in small doses, but large doses cause living things to deteriorate. Seithr has been described as 'Particle Type Programs.' It's suggested that all things are formed out of Seithr and everything can be broken back into Seithr, making Seithr the building blocks of creation.
Azure (蒼 Ao: Blue)
The core concept of BlazBlue, but not fully explained. The Azure is the power of Creation and Destruction, it can be likened to the abilities of an Omnipotent God. The Azure seems to work by manipulating Seithr. Things need to be destroyed into Seithr, then new things can be created out of Seithr.
The Azure exists in/as a physical location. It's mostly made up of souls. It is the core of all the alternate universes and all things exist because of the Azure. The more access a person/device has to the Azure, the more powerful that person/device will be.
Soul: It’s very important to note that souls definitively exist in BlazBlue. The soul is a person's true form. It looks like a grayish orb that glows with an azure (blue and green) light. After a person dies, their soul returns to the Azure, where it is stored and preserved along with all the information/memories it possesses. Some characters can see souls. Powerful souls can have a special power called a Drive. Drives can sometimes be so powerful that they're an existence on their own. Some souls have special innate powers, such as healing magic. It's said that "strong souls pull the Azure."
This is the space that surrounds the Azure and is connected to all the alternate universes. The Boundary appears as an infinite dark space, illuminated by any living that enters it. The "Edge" refers to the space between the Boundary and a universe. The edge of the Boundary is where its effects are least powerful.
The Boundary is very mysterious. It’s filled with Seithr. In theory, one can see and travel to any possible timeline/world from the Boundary. But only people with incredibly strong souls can spend even small amounts of time in the Edge without being reduced to their soul, much less in the Boundary itself.
Observers (観測者: Kanshokusha): Observers can create Phenomenon Interventions (choosing a particular outcome out of a set of outcomes) and allow things that are on the cusp of existence to exist. If no one is Observing something that requires Observation, that thing will cease to exist. It's difficult, almost impossible, to Observe something that's unrealistic. Observers must Observe themselves to continue to exist.
Onlookers (傍観者: Boukansha): (This term was originally localized as Onlooker, but now is usually localized as Observer. This is really confusing because there's another term called Observer that is a totally different thing. I will use Onlooker throughout this guide.) An Onlooker can watch what happens in the whole world at any time. They have a lot of other powers as well. If an Onlooker interferes with the events of the world, they eventually lose their powers and status. It seems that there is one Onlooker per world. If an Onlooker dies or loses their status, a new Onlooker is somehow chosen.
Logic / Reason: The absolute fundamentals of the world. It consists of the four elements (fire, earth, water, wind) and the Two Origins (light and darkness.) There are beings that are "outside of logic/reason" and they can not be killed by normal means.
I'm somewhat fuzzy on how this concept really works, but I'll do my best.
The BlazBlue franchise is confusing because it allows for alternate worlds and timelines. Things that exist in a world but logically shouldn’t (for example, a magical being that exists in a world where magic doesn’t exist, a tank whose engine was never invented in history, or a person who had died in a world where the dead can’t come back to life) are Phenomenon. Because Phenomenon exist “outside of logic and reason”, they can’t be destroyed by normal means.
Phenomenon Interventions are when an Observer chooses a particular outcome out of all possible outcomes. Interventions are increasingly difficult the less likely they are to have naturally happened. Intervening such that you dodged left instead of right is much easier than Intervening such that the moon crashed into the Earth. Intervening seems to involve rewinding time and rewriting memories, so that paradoxes don’t occur. Some people maintain their memories and soul wounds even after Interventions.
Three Treasures / Sankishin / Original Units: These are special devices that draw their power directly from the Azure. They can be controlled, their sentience is up for debate.
Cauldron (窯 Kama: Furnace) / Sheol Gate / Gate / Furnace: A Cauldron is a physical gate in the world that leads to the Boundary. A lot of them exist throughout the world in various shapes. Being near a Cauldron produces strange effects on people due to increased amounts of Seithr (and, I think, because they become aware of all timelines.)
The Mage's Guild and Ishana: Magic exists in BlazBlue, but was a secret until the Dark War. "Magister's City: Ishana" existed on an island in the Atlantic, surrounded by a magic barrier that repelled all interference from the outside. It housed the Mage's Guild and Academy. The organization existed to protect and enhance Alchemy and Magic. The Mage's Guild had constantly, but secretly, influenced change in the world throughout time. They didn't belong to any country nor bend to anyone. The Mage's Guild's most powerful group was called the 'Ten Sages', although there may not have been ten at any given time.
Amanohokosaka Clan: The Amanohokosaka Clan is a family of exorcists and Sorcery users. They do not get along with the Mage's Guild. They are made of several families: Hajo, Kagetatsu, Hikagami, and Terumi.
Beastkin: A race of that look like animals, but behave like humans. Beastkin (like Jubei and his brother) have very long lives.
Demi-Human: A race that look like humans with animal features (like Makoto with her tails and ears.) They are often discriminated against.