Everyone is here.
On the surface, it applies to the veterans returning.
But Spirits brings new meaning.
Galeem wiped out the galaxy and turned everyone he didn't capture into formless spirits floating aimlessly, searching for a way to reclaim their prior selves. Then he used those he did capture, that is, the playable fighters sans Kirby, and produced copies of their forms for the spirits to possess. He made an army of clones out of the most powerful champions in the known realm and presumably intends to invade the real world with them (speculation on my part).
The way this translates into gameplay is what matters. A spirit is provided with a clone by Galeem, and it then possesses the empty clone and alters its own appearance as much as it can to match the original form it remembers. That's how we get Lakitu and Spinies out of Lemmy and little red bowsers, for example. What I'm trying to say is, we are actually fighting the real Lakitu during that match. He looks like Lemmy because his old body was destroyed and he possessed a clone of someone who kinda sorta looks like him, but mentally, that is Lakitu. Every little red Bowser is, mentally, a real Spiny. This applies for every spirit. By defeating them, you free their spirit from their clone prison and weaken Galeem, and once you've freed enough spirits to reach him, you take him down for good and restore everyone's original bodies. The whole party system thing makes sense now too. You aren't just applying glorified stickers to your fighter for arbitrary stat boosts, you are recruiting the disembodied spirits of those real characters, which then follow you into battle and lend you their power.
This is why Sakurai said to use a little imagination. He went and created an entire new game mode with complicated new lore that allowed him to bend the rules and include hundreds and hundreds of fighters, so long as the players are imaginative enough to see them for who they really are. He said all along the theme of Ultimate was inclusion, but no one could have seen this coming. He's honestly a genius. He loves all of us and all of those characters, and this is the proof. I can't express enough how much I love him and this game back.
Everyone. Is. Here.