First time hearing this, care to explain what did they fuck in the sequel?
In the steam forums people whine a lot about the elemental interaction with spells(blood, dirt,etc) but otherwise the game seems good.
Having played a bit more of the EA release, my tone was more than a bit harsh before.
That said, I've played a lot of games over the years that tried to use this sort of armor system (where you have to do damage to get through the armor before you can do actual damage to the character) and I've never felt it was a good system. This spans from tabletop RPGs as far back as the 80s along with several video game examples as well.
This particular system, having two different armor pools to get through for different attack types is probably the worst of the bunch. It leaves too many situations where a character has nothing worthwhile they can even do on their turn. This is compounded by the fact that skill books are almost impossible to come by in the early game, so the player simply doesn't have the tools to diversify their characters' abilities. It does alleviate when you do finally get to skill merchants (for things other than Geomancer) a dozen hours into the game, but you're still left with the weird and illogical armor system to deal with every fight.
As you mentioned, there are also some issues with surface types not reading well on-screen.
All that said, there are a lot of areas where they took measures to improve on things which weren't great in the original, in particular character skill choices. You now have two skill pools - combat and social - so you aren't stuck gimping a character in combat in order to take a convenience skill like Loremaster, as an example. Simplifying the AP system is also a plus, and a lot of skills have been re-balanced in intelligent ways. Ricochet was nerfed in some pretty idiotic ways, on the other hand.
There are also a lot of effective nerfs to skills due to the way battles are staged. Your team pretty much all start right together in a clump unless you specifically go through the tedious ordeal of trying to position characters one-by-one without also triggering the battle, so spells with a small AoE are super powerful in enemy hands, but enemies tend to be spread out all over the place, so they're generally just single-target spells for the player. The game would benefit from a "setup round" at the start of combat where you could position your units as you like after the battle has been triggered.
A lot of battles also have the annoying tendency to put all of the enemies in super-advantageous positions to start the fight, and conveniently out of range/sight for skills like teleport or nether swap. Some of these can be approached from other angles, which feels a bit like cheap trial-and-error difficulty, and some just are what they are - deal with it.
It's not all bad though. While I was feeling pretty down on the game last night, I'm moderately positive on it now.