There are two different ways to target. One is the Tab button, and the other is using the targetting filters and the NUM4 and NUM6 buttons (default PC controls) and, I think, the D-pad on my controller. The tab target gets the nearest enemy, the target filters just go left and right, like FFXI style.

Kinda frustrating trying to heal random people out in the world, or in a FATE. With the filter set to "Friends", as soon as I start casting a cure, it switches my filter to "Custom", then to "All". Either I'm not using it correctly, or it's broken.