Arc hinted that Arc-Fest would include an announcement to get their fans going. The Guilty Gear Xrd SIGN reveal certainly fits that bill. The trailer, which appears to focus on actual gameplay, shows Sol Badguy and Ky Kiske, in their new, somewhat exaggerated, redesigns squaring off with one another in the classic 2D style. They posture, they clash.
And then the camera rotates around them, revealing them in full-3D.
Yes, despite the appearance that everything consists of 2D animated sprites, an impression aided by everything from the art style to the somewhat stilted way in which the characters animate, Guilty Gear Xrd is apparently rendering everything in three dimensions with a very purposeful art style. This explains the Unreal Engine logo that flashes near the beginning of the trailer, and also seems to be used for a pair of dynamic camera switches during combat. Largely, though, the action appears to be confined to two dimensions (which is the way Guilty Gear players like it).
Though only Sol and Ky are shown fighting, the trailer does end with a shot of Millia Rage, and a flash of Eddy/Zato-1, implying that both will be in the game.
Source: Joystiq