I'll compile all of what I've learned about Bayonetta so far.
I've been doing a lot of experimenting with what Bayonetta is capable of, and I can easily say she's not too difficult to use effectively.
In her home game, you're rewarded for the amount of combos you perform, as well as for minimizing your own damage. This is reflected by her playstyle in smash. She's a weird mix of rushdown and keep away, and I believe mastering her requires mastering the parts of her skill set that require the most finesse.
A notable example is Bat Within. Not Witch Time, Bat Within.
I cannot begin to describe how useful that ability is, because Bayonettas roll is awful. Yes you still take damage, but you can generally place yourself in a more advantageous position than when you'd normally roll. It's easiest to do against a projectile; run towards it, and immediately short hop and air dodge as you make contact, place yourself in the air, and follow up with an afterburner kick, because so far it has tripped up everyone I've used that on. Works best on rapid projectiles, much like her own neutral B, and when someone is attempting to spike you. The latter is obviously more dangerous and could cost you a stock, but it also might save you one.
Speaking of Bayonettas gunfire, I noticed that Witch Time does not trigger on projectiles, but it does trigger if another Bayo is firing the guns from an extended attack (the ones with no hitstun or knock back).
There's also many combo options in the air depending on the weight of the opponent and how they DI. Sometimes I can pull off Side B on the ground, up B, side B, bair, side b, bair. Then other times I cannot even hit the first side b.
Extending your nair and uair are great for catching air dodges, and very good for gimping recovery. Just jump off the ledge and uair. The hit boxes are big enough and last long enough to eventually connect with an unsuspecting opponent. You can also mix up with her fair on the ground if you short hop close enough. Even if they shield, you can continue the string of attacks and place yourself behind (or in front of depending on where they're facing) your opponent.
Also, be very aware of the increased ending lag after doing a lot of aerial combos. It is tempting to want to stay on the opponent after a combo, but landing beside them is ill advised, because you will be punished due to the lag.
Her biggest flaw is her lack of killing power. Yes her smash attacks are strong, and it's tempting to be careless and throw them out on the chance the opponent will walk into it (which has happened a lot), but as I'm playing, she really relies on spikes, gimping, and Witch Time to get her kills. If another player is playing defensively, it can be very difficult to land a killing blow, or even get a grab due to how short her grab range is.
In terms of those smash attacks, they basically have no priority. They'll cancel out a lot of moves, but all an opponent really has to do to avoid being hit is to throw out a smash or tilt of their own and they won't be hit by the attack whatsoever. And even then, they're on the weaker side. I assume this is to compensate for how vulnerable WT leaves the enemy. Since this is the case, only use them when you know they will land. Baiting the opponent by running away and doing a quick pivot smash has netted me a few kills.
These drawbacks are somewhat made up by having the best spikes and the second best counter in the game. Her dair being the best. The heel retains the meteor spike during the entire animation, and people generally don't expect you to jump off the stage and instantly drag them to their graves while they're already below the stage. It is generally safe as well, so long as you don't double jump before using Witch Twist.
I called Witch Time second best because it is so very easy to whiff it completely. If the opponent is too high in the air for a smash attack, you've basically wasted your WT and would have been better off using Bat Within to place yourself somewhere else, because even bair takes a high percentage to kill with. I also can't even tell all of you how many times I've meant to do a smash attack only to throw out my tilt and have WT end.
All in all, there's still a lot to Bayonetta that we've not yet discovered, but hopefully this helps anyone trying to make her a viable option.