How do I gear and equip my characters?

I'm really struggling on understanding what kinds of equipment I should be using for my characters.

Setup & Current Equipment:

Vaan - Uhlan / Time Mage --Heavy Lance // Heavy Armor

Balthier - Monk / Archer -- Battle Bamboo // Light Armor

Fran - B. Mage / Bushi -- Wizards Staff // Mystic Armor

Basch - Knight / Shikari -- Blood Sword & G Shield // Heavy Armor

Ashe - R. Mage / Machinist -- Bhuj & R Shield // Mystic Armor

Penelo - W. Mage / Foebreaker -- Serpent Rod // Mystic Armor

Take Penelo for example. Mystic Armor boosts MAG but Heavy Armor provides more DEF. This seems completely counter intuitive.

I have no idea what I'm doing and everything just feels random to me. Like when I go to the license board, it's just like OK give me HP & Lore, everything else, I'll wait until I find a vendor that sells the next upgrade.

Should I put my casters in heavy armor and give them Swords/Hammers/Katanas or have caster weapon/heavy armor? What about physical dmg and mystic armor? I also have no ranged other than Fran. If I give Balthier a bow, he loses all his Evasion.

Any help would be greatly appreciated!