There is gear sorting, but it's not retroactive. If you have auto sorting on, all new items you get will be sorted automatically. It's like equipment does in bag 1, usable items in bag 2, materia in bag 3, mats in bag 4, or something like that. But as I said, it's not retroactive which sucks. Only new players with fresh inventories will benefit from it, if they even know where to look for the toggle. It's hidden in the menus.