Battle of Narshe
When fighting the battle at Narshe you should have 7 characters at your disposal. Your task will be to split them up into three teams. A boss will have to be confronted by one of those teams and there is a semi-optional mini-boss as well.
The characters you have at your disposal are: Edgar, Sabin, Cyan, Celes, Terra, Gau, and Locke.
Your three groups have the task of stopping the imperial soldiers from reaching Banon at the top of the Narshe cliff. It is recommended to split your characters into three groups of roughly equal strength with one group powerful enough to fight a boss.
Sabin, Edgar, and Cyan are the strongest physical attackers. They have special skills which do extra damage, and Edgar should have a few tools which do damage to all enemies at once. Put them in three separate groups.
Celes, Terra, and Gau are the only characters which can use magic so far. Magic can be used to cure, and do damaging attacks on one or all enemies. Assuming you learned the right rages for Gau, he should be able to cast Bolt2 by doing the Hazer rage, putting him on an equal level with Celes or Terra for magic users. Put the three of them in three separate groups as well.
So far you have three groups with a strong physical attacker and a strong magic user. Locke is your wildcard since he possesses no special abilities that will be useful so far. If you gained the Genji Glove in chapter 2, give it to Locke and he will be able to attack twice, making him an excellent complement for whatever group you choose to take on the boss.
Position your three groups so that between the three of them they are blocking all possible paths to Banon. Make sure you have a large supply of tonics and possibly ethers so you can restore HP at every possible chance in between battles. Switch between groups when you have the time and if possible, advance in your position to tackle the enemies sooner rather than later. Some of the groups contain four or more soldiers so multiple enemy attacks will be essential. Just constantly use tonics in between battles whenever you have the chance and use your strongest attacks, casting magic on all enemies when possible.
An alternative strategy is to split your party members into two groups of three and put your weakest member in a group by himself. If you advance your two parties far enough you can block the enemy soldiers at two choke points and consolidate your forces more. You'll have less time to heal though and will need to move fast.
After defeating all the soldiers which walk around trying to fight you, send your most powerful groups down to the bottom of the screen, pick one of them to take out the henchman guarding Kefka, and have your most powerful group engage in the fight with Kefka himself. Assign your magic user to healing duty, and have your other characters constantly attack. It's a good idea to have Celes in the party that attacks Kefka. She has the runic ability. Normally the runic ability is mediocre at best, Kefka uses muddle, berserk and poisen. At this point these status aliments can be pesky, and seeing as Terra and Celes are the only real magic users, and Edgar's, Sabin's and Cyan's special abilities are stronger than magic at this point, you can use runic to absorb Kefka's magic and defeat him with relative ease.
After you defeat Kefka, Terra will make contact with the Esper. Because of a sudden reaction, she will depart from the party for a long while and will not be playable until then.
You'll need to pick a party of four to send out. A few things to keep in mind would be that Locke and Celes are required for most of the later scenarios, you may choose not to spend the time leveling them up consequently or to spend more time leveling them up because you won't need the others. Edgar, Sabin, and Cyan are obviously your best physical fighters at this point, so having them along would be an asset. Also, if you pick three characters Shadow can join you temporarily for a fee, but it probably isn't worth the expense. Edgar may also be worth bringing simply for the fact that he can get discounts at Figaro Castle and you'll be able to use the chainsaw on this next sequence of events. Also if Edgar and Sabin are in your party, and you stay the night at Figaro castle, you will get a cut scene with the coin-toss for succession. Also if you have Locke in your party when you go to Kohlingen you will get a cut scene. I *think* you need to have Celes in the party to see a bit of dialogue in the Opera House that references Locke's cutscene. This adds to their relationship a bit. Now that's four people, so if you want Shadow in your party, you would have to go to Figaro, stay the night, go back and dump Sabin or Edgar...but Shadow will leave your party at Zozo anyway, so it's best to take four and not hire Shadow.
Regardless of which party members you pick, you should purchase and do everything you can in Narshe, and then go to Figaro Castle and use it to travel underground. Put Edgar at the front of your party to get discounts on items and make sure to buy all the tools you don't have. If you sleep at Figaro with Edgar and Sabin in your party you get the aforementioned scene. Talk to the engineer down the stairs at the front of the castle to travel to Koholigen. To the north west is a man trying to start a Coliseum, his house also contains a hero ring. Go to Koholigen and you'll run into Shadow, who will offer to join you temporarily if you have less than 4 people in your party. Go into Rachel's house with Locke at the northwest and you'll see another extra scene. Go into the house at the northeast for yet another scene, and enter it from the back to find a Green Beret. You'll learn that the Esper you believe to be Terra flew off to Jidoor, so leave the town and head South. Shop around and explore Jidoor, and you'll learn about the Opera House and the city of Zozo to the North of Jidoor. Head north east around the mountains then south to reach Zozo.
The trick to the main puzzle in Zozo is that everyone lies, and you need to figure out what time the clock in the inn at the back of town should be set to. A few people give you hints about the hour, there's a clock in town which someone tells you the minute hand is definitely wrong, and a few people give you hints about the second hand. By process of elimination you can figure out the correct time... or just take the cheap way out, go to the inn at the back of town and set the clock to 6:10:50. This allows you to collect the chainsaw, which has a chance of killing a target in addition to performing high damage. Note: you can steal Atlas Armlet's from HadesGigas (rare steal) and you can steal Dragon Boots and Goggles from Havester. Goggles are the common steal and are vendor trash, but not only are dragon boots useful, they also sell for a good price. Note, if you steal from a Havester they will steal some GP from you. Kill them fast after stealing, as long as they don't escape you'll get your gold back.
Some of the buildings contain various items so you may want to work through them, but the "relic shop" is the one which will take you to Terra. Simply climb your way to the top and jump across buildings as necessary and you'll reach a boss fight, and finally run into Ramuh and pick up three other Espers. You'll choose a new party which includes Celes and Locke (with no way to remove them, as they are essential to the upcoming storyline), then head out to Jidoor. Go to the skills menu and make sure to assign everyone an Esper, then get going.