Universal Defense
Guarding
By holding the 
button, you can block incoming attacks, completely negating the damage of some and strongly reducing the damage of others, such as Ki Blasts and Blast 1/2s. Holding the will lock your character rotation, pressing 
or 
while guarding will change your guard stance to either a high or low guard, respectively, these alternate guard stances will defend against different types of attacks such as directional Smash Attacks or different Rushing Techniques.
Alignment
As explained here, ensuring that you're properly aligned with the opponent can greatly reduce damage taken, as allowing your opponent to attack you from behind will nearly always result in them dealing a higher amount of damage to you. The most basic way to realign is by tapping the button, however, you can align more effectively as detailed here.
Defensive Vanishing
Defensive Vanishing is one of the most useful methods of defense to master, as it can be done in many scenarios against many types of attacks, and completely avoids any damage regardless of type. This can be done by tapping right before an attack that can be vanished hits you, and for some attacks (mainly Blast or Explosive Wave type B2s) require multiple sequential vanishes to properly avoid all incoming damage. This can be done while facing away from the opponent.
Melee Defense
Z-Countering
Z-Countering is a very precise defensive mechanic, and should also only be done conditionally, this can be done by pressing 
while holding on the exact frame a melee attack of any kind (excl. Blast 2s/Ultimate Blasts). If you successfully perform this technique, you'll vanish behind your opponent and hit them with a counter-attack that can be vanished, if they vanish this it will begin a string of vanishing back and forth between opponents, in which the first to fail or the one with the most Ki will lose the vanish string. If fail to vanish you'll be hit by the Z-Counter counter-attack which will lead into a Dragon Smash String. If you have less Ki an no one fails to vanish, you'll vanish a final time but will not counter-attack automatically, meaning you can manually attack them with a safe option such as Rush Attacks. These are all the attacks that can be Z-Countered:
- Rush Attacks
- Rush-In Attack
- All Rushing Techniques
- All Smash Attacks
- Throws
- The final two hits of Rush Finish
This can all be done while facing away from the opponent.
Auto-Counter
Auto-Countering can be initiated in four ways, by tapping 
while holding , by tapping during a Step-In, or by tapping during a Rush String, or by tapping after a Lift Strike lands. Any method of Auto-Countering will cause you to enter a stance which you will be locked into until at least half bar of Ki has been drained, however you can hold this stance for longer at the cost of more Ki drain. While in this stance, Rush Attacks will automatically be counter-attacked with some characters having the option to follow this counter-attack with a second attack called "Auto-Smash Counter," done by tapping afterwards.
Sonic Sway
Sonic Sway works essentially identical to Auto-Counter, being done the same way and having the same result for the most part. Sonic Sway is activated interestingly, as for the user all you need to do is go into your Auto-Counter stance, if someone happens to try to hit you with a Rush Attack as your character is going into this stance however, a Sonic Sway will be initiated, in which a cutscene will be activated where the user's character model will dodge a flurry of melee attacks released by the opponent, this will drain a single bar of Ki from the opponent. This attack also has a follow up that is identical to Auto-Smash Counter, being called Sonic Sway attack and being done the same way. This cutscene can be manipulated however, as shown in the GIF below:
GIF Credit: Creatful_Chaos
Ranged Defense
Deflecting
Deflecting is the most basic form of defense against Ki Blasts, excluding guarding, being done by pressing 
and 
repeatedly while holding . If an enemy Ki Blast is active, doing these inputs will result in your character swinging their arm back and forth to slap any incoming Ki Blasts as demonstrated below:
Upon Deflecting a blast, it will fly to the side and is unlikely to hit the opponent, however in close range combat, such as someone doing Ki Blasts after Flying Kick, there is a chance that the Ki Blasts will hit the original attacker. Deflecting cannot be done against Blade type Smash Blasts. Upon successfully Deflecting a Ki Blast, your Blast Stock gauge will fill slightly.
Reflecting
Reflecting is similar to Deflecting, but a bit more advanced, it's done similar to a Defensive Vanish, by tapping right before the Ki Blast hits you. Unlike Deflecting, this form of defense only works against Smash Blasts, and will have no effect on Rush Blasts. Also unlike Deflecting, Reflecting will actually make the Ki Blast go back towards your opponent with enough accuracy to often hit them, as demonstrated below:
Reflecting cannot be done against Blade type Smash Blasts.