#1. Activate the AI.
Left clicking the little head on the action toolbar toggles the AI script for the chosen character. When the head lights up, the script you have selected is enabled. (See screenshot below)
#2. Selecting AI script.
Right clicking the little head on the action toolbar or left clicking the little head icon in the in the bottom-right corner of each character's mugshot in the character sheet brings up the script configuration.
By default everybody is set to defend self and to not use any per-rest abilities; In other words, they'll stand still, attack enemies in range of their weapons, use per-encounter abilities, and nothing else. (And that is IF you have activated the AI).
You need to decide which engagement range (passive, defend self, defensive, or offensive) fits that character best, choose which of the available scripts for the character (depending on class) you want to use, and whether you want to allow the character to use per-rest abilities or not.
pi2repsion's post in Party AI inactive was marked as the answer