The sword gameplay is the focus here, so I'll start with that.
I really do like how attacks are physics/collision based. It looks good and feels great. The arcs showing where the sword will swing is super helpful (although one seems to be missing), and the way you may or may not hit depending on exactly where things are positioned keeps it interesting.
One major issue with combat is one that's been pointed out already: it's kinda hard to hit enemies, and way too easy to get too close to actually hit them with your sword. There seems to be a very narrow sweet spot in which your sword actually hits. It might be worth exaggerating the size of the colliders even if it's less physically correct*.
*fun fact: the sword in A Dream Of Valhalla has a reach of something like three metres
I also found dodging to be pretty awkward, and I'm not sure why. The movement controls aren't unconventional, enemy movement isn't unusual, yet dodging feels a lot worse in this game than it does in most of the others I've played.
There isn't really a counter to the arrow enemies at this point. Maybe if you had a shield that could block arrows, that would help.
A few other minor nitpicks: Damage text/callouts need to be bigger and bolder, because I can't tell who is being damaged or how badly. Movement speed should probably be slower when you have your sword out. A few times I took damage for no discernible reasons, maybe from the weapons of enemies that had already died.
With some minor tweaking it could be really good. Even as it stands, it's good enough to underpin a bigger game. It wouldn't be amazing, but it would be decent enough, especially if there was story or exploration or something else to carry that game.
It might be worth trying lock-on. I can't say if it would be better or not- it's enough of a departure that it would require another round of testing to see if it works.
It'd also be nice if selecting an attack unsheathed the sword automatically, but that's a pretty minor nitpick.
The visual style is somewhat inconsistent, but the little 3D island full of trees and rocks has a surprising amount of charm. For a mechanics demo, it's more than fine. If the full game had graphics at the same level and style, it would be pretty decent. Once again, not stand-out amazing, but decent enough. The only major issue that really needs to be fixed is the excessive pop-in. Sometimes objects would change LOD dramatically only a few feet away, which was extremely distracting.
The audio is functional. The mixing is a bit weird and some effects are oddly chosen.
It has remappable controls, which is really nice, and a few other options as well. The menus and HUD are pretty minimalist, but already have some style to them, and once again are surprisingly impressive for a mechanics demo and would be just fine in a full game.
I think that sums up this game in general. As it stands, most of the elements would work fine as-is, and if expanded and/or refined a little, they would be pretty damn good.
At the same time, though, it is still just a mechanics demo. There's a target to hit, a little bit of physics to play with, a few enemies to kill, and that's it. There are no healing items so any damage you take is unrecoverable, and no real game-over, you just die and have to restart. And while you can explore the island, there's nothing there to find, so there's not much point in doing so. Finally, without magic implemented, it's not really a magical girl game.
That's kinda the difficulty with all the incomplete games in this jam, though. If you try to take them as more than they are, they don't measure up, but they shouldn't be expected to.
In any case, I'm looking forward to seeing what you come up with next!