I'm going to be working on a guide to answer simple questions like these. How do you sit?
Also, I haven't gone outside to fight anything yet, so I don't know if you still have to toggle in and out of active/passive with the button. From what I've seen in town hitting enter with an NPC targeted seems to put you into active and escaping out puts you in passive?
Selecting a hostile action for use on an enemy while in passive mode automatically puts you in active mode, and I think talking to an NPC while in active mode puts you in passive mode. You can still switch between modes with the button.