I'm probably going to get
'd, but...
The Monado isn't just a typical sword, ( what even IS a typical sword?) and has a ton of powers that become more and more interesting as the game goes on, such as: the power to buff allies, shield allies, speed up their reflexes, lock enemies out of special moves, among other things. You don't get even half a taste of it from 20-40 minutes of gameplay.
It also allows Shulk to see the future, which aids him and his allies in battle by warning him of incoming attacks and allowing time to counter, and outside by foretelling future quest objectives for side quests occasionally. Ideas on how this concept could translate to Smash vary.
Shulk isn't your "typical" JRPG protagonist, and instead of a world-saving chosen hero, he's a doubt-filled shy lab geek who sets out on a quest for vengeance with his best friend.
Shulk (and Xenoblade in general) is deserving of a spot on the roster because of its uniqueness in the Nintendo library, series popularity, overall quality, and also an important way to represent both a brand new SERIES that looks to be important for Nintendo's future, and also the now 7+ year relationship between Nintendo and Monolith Soft, who has helped on numerous miscellaneous projects since their acquisition and just grown very close to the Big N.
I hope that helps!