Which characters and items can I use?

It varies per tournament, and the Overview and Rules tabs spell it out for the one you are looking at. The three character setups are:

• Randomly assigned from a preset list.
• Pick from a preset list the organizer chose.
• Bring your own — anything from your inventory, within the grade and level condition.

Grade and level appear either as an upper limit (anything at or below it is allowed) or as a fixed value every character is normalised to, so matches come down to skill. Items are either the standard in-game rules or a preset loadout, and some tournaments also set an arena-rank condition for entry.

Check this before you register if it matters to how you play.