The stage takes place on the back of the Titan Azurda, Rex's companion in Xenoblade Chronicles 2. A singular small floating platform is on the stage's left while Azurda's neck and head act as sloped terrain. On occasion, Azurda's head will raise, lower, or move to observe the area around him, greatly shifting the size of the stage as well as moving the ledge of his head; there are several subtle cues that can alert the player that his head will move, such as his neck ruffling or the door to Rex's house suddenly closing. Throughout the match, Azurda will often provide some light color commentary of the battle, even during specific conditions such as a fighter being down to one Stock or if a player Self-Destructs. He will also make remarks about his surroundings, or just have some banter. There are also specific lines he might say if Pyra and Mythra are present.
Much like other stages in the Fighters Pass, Rex's party will make appearances in the background, usually around his house. A random Driver and Blade pair will randomly be selected every time the stage is picked; the pairs are Nia and Dromarch, Tora and Poppi α, Mòrag and Brighid, and Zeke and Pandoria.
As the match progresses, Azurda will continuously sail through the Cloud Sea. Along the way, he will pass several Titans in the background, all of which are key locations in Xenoblade Chronicles 2. Whenever a new Titan appears, the stage's lighting and colors will shift to match. The Titans that appear are Gormott, Uraya, Mor Ardain, Tantal, Indol, and Goldmouth with the Argentum Trade Guild (with the Maelstrom following close by).
For this stage, it now takes the form of an airship constructed to match with the game's Battlefield and Final Destination. Azurda and Rex's party will not appear in this stage but will still pass by the Titans.
If hazards are turned off, Azurda will not move his head at all, keeping the stage's size constant.
Alrest is the main setting of Xenoblade Chronicles 2. It is the world in which all of Titans roam around in, with whole civilizations and environments being carried on their backs as they fly through an endless sea of clouds. By the end of the story, after the clouds part and the ocean is discovered, the Titans finally land on the water to join together and create a new landmass for all people to live in.
Azurda is a Titan who appears as a white dragon and was born originally as a Blade from Torna's Womb. He is Rex's friend and guardian whose home is built on his back, as well as Rex's mode of transportation, taking him to salvaging opportunities. Rex also affectionately calls him "Gramps".
During the Aegis War, he fought alongside Addam, Mythra, and their companions against Malos. In the aftermath of the War, Addam tasks Azurda with protecting the third Aegis blade in Fonestt Village. Within the 500 years in between the Torna prequel and the main story, Azurda takes in Rex after his parents pass away.
Soon after Rex awakens Pyra, Azurda helps them and their allies escape from Torna but unfortunately suffers near fatal injuries at the hands of Malos and Jin. After crash landing on Gormott, he reverts back to his larval state to keep living and proceeds to reside in Rex's helmet for the rest of the game. After the party defeats Malos, Pneuma resonates with Azurda's Core Crystal, reverting him back to his Titan form allowing the group to escape the World Tree's destruction.
- The World Tree appears in the stage's beginning, but can only be seen when moving the camera all the way to the left.
- Much like Pyra and Mythra, Brighid's outfit has been edited from the more revealing version in Xenoblade Chronicles 2 as to comply with Super Smash Bros. Ultimate's E10+ rating.
- Several of the animations Rex's party does in the background are directly taken from the original game's idle animations, such as Nia trying to catch a butterfly.
- Moon, Metroid, Ashley, Burrowing Snagret, Squid Sisters, Devil, Vince, and Dillon are the only Assist Trophies that will not appear on the stage. Alolan Exeggutor, Alolan Vulpix, Fennekin, Pyukumuku, and Marshadow are also the only Poké Ball Pokémon that will not appear.
- With the major Ver. 11.0.0 overhaul of Rex's spirit battle; which is located in the Sacred Land subworld, Cloud Sea of Alrest is the only DLC stage to make an appearance in World of Light.