I played the game enough to platinum it, so I feel I am qualified to say that what harmed the game was that it was pretty ordinary in every single respect.
Everything that could have been good about it didn't get fleshed out enough:
-Interesting combo building system, but ultimately broken because you can't carry your combos between enemies like Batman, the lock-on system was horrendous and you can just spam healing attacks and never be in any danger. Also, making you fight an enemy that you can't damage without hurting yourself before giving you either of the special moves that can take them out, damage-free, is extremely poor design.
-Really cool memory-altering mechanic that you only get to use a handful of times in the game, and which in at least one case seemed to have a completely arbitrary solution.
-Buggy insta-death traps during scripted action sequences.
-Interesting environments that are completely boring to explore because of the rigid movement system meaning you can only jump from highlighted ledge to highlighted ledge.
-Unique and engaging main character who barely gets any character development because she is just constantly ordered around by other people and is also saddled with some truly abysmal writing ("This little red riding hood has a basket full of kick ass." lolkillmeplz)
-Unskippable cutscenes in a game that is designed to be replayed, and forced dialogue sections where Nilin slows to a crawl; again extremely aggravating when you're only replaying a level to pick up the collectibles you missed.
That's just off the top of my head, I can copy-paste the full review I wrote if anyone cared to hear more.
So no, the game wasn't misunderstood, it just didn't live up to what it could have been. The good thing about that though, as far as I'm concerned, is that it's much better than a game just being shit because it is shit, I'm still really looking forward to what this developer does next, I just hope they take the time to either flesh everything out or just nail down and focus on a single core aspect.