Finally wandered into the creation room, which has probably been available since after I left the first planet (I'm now leaving the second; Second boss was much more difficult than the first).
How it works is, you start up and have two options. The first is "Invent New Recipes" and the second is "Create Items". In the invent new recipes screen, you can put your aquired characters in up to four groups of three. Each have their own pluses and minuses on various types of creation (Smith, Cook, Alchemy, Artistry, Engineering, Crafting, Compounding, and Sense). Then once you've put together the desired group, you click 'start' which will have groups think up new recipes until they can't think of any more. Each rotation of the clock takes 1 Party SP. Recipes that are discovered are completely random and I don't know if it's possible to discover recipes you've already learned. However I do know that you can't discover recipes that are higher than the character's create skill. Since each character is unique, you don't have to worry about leveling up every single character in every type of item creation.
As for the second option, create it's split into the same categories as mentioned above with one exception. Instead of sense, there's synthesis and it doesn't say "Recipes #" next to it like the other seven do. Beyond that it's just about selecting the recipe you want to craft (Greyed out items you don't have the materials for) and it will be crafted. It doesn't look like there's a chance of failure either. As for the stats, rarity, and materials required for the items you crate, they are all listed in the toggle windows.