Dynamic battles

In the Tera movie clip that shows the non targeting system. It seems that the timing, distance, and direction are all three required criteria that need to be inline to damage a monster. If any of the three are not performed correctly, will this result in a missed attack?
Basically you won't hit the monster. Due to the emphasis on AOE and ranged attacks, broad managed movement and huge weapons are used in the game. In Tera, a dagger type class will not exist. This is to reduce the level of difficulty on players and equal out the wide range of combat damage. To ensure the effectiveness of melee attack, you get some skills.

Does the non-targetting system apply to only monsters? Will auto follow work by targetting a character for characters such as healer?
The non-targetting system works for characters and monsters in the same way. If you look at the video clips, you can see healing is also an aoe effect. The auto follow system will work as a separate system. For the player's convenience auto follow will work as a targetting system.

According to the video clips there are different types of party setups, such as a Roman shield squad or a Lance pole arm squad. Are these the party formats we are going to see in the game?
Certain mobs require a particular party setup, but besides this particular setup, you can also have a dynamic party setup. For instance, for a ranged mob putting a heavy shield squad in front to tank the boss may be effective, but a single standing mob won't require a shield squad. Tera lets the user experience different and dynamic party styles for attack monsters.

Is the game concept PvE or PvP centered and is the battle system switchable from PvP and PvE?
PvE and PvP are two patterns included in the whole battle system. However, these aren't implemented as a separate system. Gamers can see that this is a system working as one.
For example, in Warhammer Online, PvE and PvP have different levels. This makes sense conceptually, but from a gamer's point of view it does not work very well. This game will try to make a seamless difference between these systems to make the game more enjoyable.

Source MMO Riot