It's pretty much if you took the PS3 version and lowered the polygon count/texturing.
I actually got mad for a while 'cuz I accidentally put "Fight Request ON" before configuring my buttons, and entered Arcade Mode... and then promptly got challenged by random people twice.
I beat the first person (NO LAG, WHOOT), Vega VS. Ryu (I was Vega). The 2nd match, which happened immediately after, was terribly laggy, and it was Vega VS. Akuma (I still picked Vega). However, due to the lag and my buttons being incorrect, I did not do so hot.
Although the visuals are awesome, the framerate is not as silky smooth as the console versions.... but it's still damn impressive how great that game looks for it being a 3DS title (I'd say it's about 25-30fps? Not sure). The HUD is on the 3D 'foreground' so it's pretty cool. It's like you're looking at your characters fighting through a window.
I have not turned on the 'behind the shoulder' mode, and don't think I will be doing that any time soon. I'm not that great at the game and don't need another handicap tacked on top of that, haha.
It's a little of a cheap-yet-awesome copout to use the Touch Screen for Supers, however:
1. you can set your mode to 'PRO MODE' and it won't do that. It'll just have four area buttons for default moves (Focus Attack, Personal Action, LP+MP+HP, LK+MK+HK), instead of 'LITE MODE' which you can personalize per character, and it will have stuff like "ULTRA" "SUPER" "SPECIAL" (per character, so you can actually assign a HadokenLP/MP/HP to a button).
2. when you fight online you can request to fight people who only use your same method of play (PRO or LITE), that way you don't fight spammers who just use the special move buttons for everything. You know, in case you're worried about them being too good now that you don't actually have to press the buttons for the supers...