There are five basic item slots for equipment- Hands, Mind, Heart, Body, and Feet. The Hands slot is where ACT boosting items can be equipped in place of a weapon. The Mind slot is for FOC boosting equipment. Items that either boost Virtue or regenerate MES can be equipped in the Heart slot. The Body slot is where defensive RES boosting items can be equipped. Finally, items in the Feet slot boost AGI.
Other items that can be used in-battle include healing items which can double as attack items, status inducing items to be used on both Val and/or enemies, and component items to be used for quests and crafting.