The Quest System works as it sounds, you're given quests of various difficulty, the harder the quests the better the rewards. There are four quests:
1. Story Events/Chain Quests(ex: when Naruto steals the forbidden scroll in the beginning of the anime/manga)
2. When the players life is in danger(ex: a team of genin vs the character)
3. Side quests(ex: D-Rank missions)
4. Challenge quests(ex: to survive for (insert time limit)against (insert character))