Ah, I've realised that the dots in combat are health bars. Thanks frostphoenix for the reply.
As for impressions, the game looks beautiful and really captures that Infinity Engine feel. The combat, however, feels too fast to me, and gets a bit visually cluttered with too many effects, colours and UI elements.
have an abilities/items toolbar at the bottom of the screen with big icons, and hide/move the menu
move action timers to the toolbar, with a green 'ready' checkbox - after all, when you want to use an ability, you look at the toolbar
make hits feel more impactful
tone down some effects: for instance, the wizard spell 'arcane veil' looks good but needs to be a bit smaller and less opaque so as not to obscure the combat
other effects could be improved - for instance, the priest spell 'divine terror' looks decidedly not-terrifying
remove health bars and rely on portraits and mouse-overs instead
slow combat down in general
In general terms, I'd like combat to feel less like a brief, hectic skirmish. The IE-style combat felt more drawn-out (in a good way), where characters would fight but not always be able to land a decisive hit every few seconds. So when the hits landed, they felt good, they felt decisive, and they altered the dynamic of the engagement. In other words, they felt meaningful. The combat felt like a sandbox environment: it would continue mostly without your input, but intelligent and timely use of abilities could alter the course of the battle, and you could experiment with different combinations without feeling rushed. That's the sort of feeling I hope Pillars of Eternity can capture.