what makes for a good fighting engine?

Like wake up games for example. People have reffered wake up games to being "a cat and mouse game". What do they mean by this?
Another thing is I dont see wake up games in 2d fighters, only 3d. What gives?

I have also heard of a "risk vs reward system". What is this exactly?

Can anyone give me some more examples on making a good fighting game and why that particular system is usefull?

By the way do you think it would be possible to make a balanced fighter that has no floater moves?