The Watchers of Fate try to stop you from encountering Sephrioth early so you fight them first in some sort of trippy realm that looks like a destroyed Midgar. There's a huge one that almost looks like a WEAPON. Every time you damage it, it gives the party flashes of the future like it's warning you to stop. You see Red XIII running with his kids, Aerith praying just before she dies, Cloud burying Aerith in the lake and Meteor. You win and have a flashback of Zack fighting Shinra outside of Midgar, then you encounter Sephrioth.
You fight Sephrioth solo as Cloud, with eventually Aerith and Tifa joining. It's hard as hell, I used 30 Mega Potions because I fucked up and gave Cloud my Cure materia which he couldn't use as he needed to use also his ATB on defending/counter attacking.
After the battle The Watchers come back and try to stop Cloud from getting to Sephritoh, but Cloud gets past them and goes down a tunnel like he does in the final battle in the original. I assume this means he is speaking to true Sephrioth and not a Clone. Cloud does Omnislash and Sephrioth blocks every hit, he then asks Cloud to join him in changing fate. Cloud refuses.
The ending then shows:
-Rufus Shinra meeting the Shinra Board members.
-Hojo laughing maniacally at the fact that JENOVA has been taken.
-Sector 7 Slums being rebuilt - I guess it was actually under the gap between the plates to get sunlight and not crushed, just damaged.
-Wedge also being alive in his Sector 5 orphanage. Sorry I was wrong about Wedge and Biggs being dead! Jessie is 100% dead though, you see her last breath.
-Zack winning the battle against Shinra and picking up an unconscious Cloud.
- The party leaving Midgar to go after Sephrioth, only they know that he wants to destroy the world now.
- A message that said that the "Unknown Journey" will continue in the next part.
So what's the deal with the next part?
It's not clear exactly how much the Party know about the future, if they only saw what the player sees, then they only know that Sephrioth is going to try to destroy the planet.
It's not clear how exactly events are able to change, the changes seem to centre around Cloud and Sephrioth so I speculate that JENOVA is behind it somehow.
The Watchers don't seem to be permanently defeated as you see some after the boss, so it's not a given that things will totally change in the next part. It just means that large changes may require a boss battle.
Zack being alive is crazy and the mystery is... where is he? He had the same treatment Cloud did, so I assume he's going to be a Sephrioth Clone. Sephrioth is shown to be able to exert control over Cloud, so why not Zack too?
I dont know why Wedge and Biggs are alive. Wedge seems involved with a side plot where there's a main Avalanche organisation that show up twice and may be in league with Wutai. I though that Rufus may be involved with them, but he blows up an Avalanche helicopter and is actually shown to be in charge of The Turks so he wouldn't need them. Biggs being alive seems unnecessary.
I would have preferred a straight remake as the best part of the game are the 1:1 remake parts. However they have succeeded in adding tension and drama to a story we already know, like when you see Wedge live and you defeat The Watchers you get hope that maybe Jessie lives (she doesn't). Now we got hope that Aerith may live, maybe she still dies and you feel bad all over again. Maybe Zack is the last boss of the next game, possessed by Sephrioth. They could do a lot with this.