It's hard to separate the battle system in my mind from the quality of encounters and progression systems; most JRPGs suffer pretty heavily thanks to the latter two. How can you really appreciate a combat system outside the fact combat is boring or pointless? It's difficult, anyway.
FFXII is a game sold short by its poorly balanced license board system (and the Zodiac/Job versions only really made the player even stronger with higher stats and growth efficiency). Gambit system puts too much focus on preparation over the actual tactics of fighting - which is an odd thing to praise about a
battle system (half joking).
Took too long. This is my definitive answer. TLR, at a conceptual level, is like one evolutionary step above the rest (especially in the presentation of combat).
Lightning Returns has the best ATB tho.
I feel many FFXIII answers should be funneled into here, since they finally got close to what they were aiming for with a higher-action ATB. Best battle system of the series and far from wasted like FFXIII (mostly), FFXIII-2, or X-2 were.
The lack of Pokemon mentions is a shame considering how the battle system is good enough to enable an entire local, online and competitive multiplayer and competitions. There's a whole social culture around Pokemon battles that I haven't seen from many other JRPGs.
As XCOM creator Julian Gollop
put it:
It's not that Pokemon's battle system is so good that it can enable multiplayer, it's that its depth is only really visible in multiplayer to begin with. Outside multiplayer, there's not much room for discussion. BW2 and maybe a few others are the only ones that can even rank compared to the average SMT game; some of the new ones like XY are especially vapid and lacking in redeeming end/post-game content. It's something that's difficult to compare to singleplayer games, which what every choice in this thread has been except from some MMOs like FFXI (which are not focused on PvP, anyway - though I loved Ballista!).
In such a comparison, I don't know if the "meta-gaming" argument has much weight. A negative way to look at it would be that the Pokemon games are extremely bloated. 700+ characters (many of whom are purposefully obsolete), similar amount of moves and deviations for each of them, etc. all filtered into bottleneck of fairly simple format of a team of six (often less in singleplayer), each having four moves, an ability, and item to hold, and maybe an extra gimmick transformation layered on top. Okay, would Final Fantasy VII suddenly be a hundred times deeper if it had 300 more characters to choose from? I think it would be a case of decreasing returns at best, especially if there isn't the tension that comes from highly competitive PvP (the "meta-game").