I'm in the process of editing video to showcase how it works, but remember that things could change with each beta patch.
Some noteworthy things about battles with wild pets (for the time being):
- You can't attack a wild battle critter with normal spells. This makes griefing less likely since other players can't kill your intended target.More to come with some video footage too!
- BUT! Other mobs can still grief you as they interact with the critters as usual. Example: I was just about to battle a critter when a buzzard decided to fly over and kill it. I'm totally reporting that buzzard! :P
- Most critters aren't "capturable", but you can battle them for experience. To distinguish a capturable pet between a non-capturable pet, one will have a yellow paw print when hovering over it and a brown dot on the tracking in your mini-map (non-capturable), while another critter will have a green paw print and a green marker on your mini-map (capturable). The critter's tooltip will also say "capturable".
- Doing battle with a wild pet temporarily removes any mobs near you so that there's a clear space for your pets to battle. Once you're done with the battle, those mobs will respawn around you. I'd be careful where you choose to pick your fights!
- Pets gain experience from a battle ONLY if they participate in it. This means you need to switch your pets into the fight if possible in order for them to receive any exp. (Unsure if this is intended or will change)
- Canceling a battle or double clicking on a wild critter will cause the battle to fail and the critter to despawn. (Unsure if this is intended or will change)
- Your companion can "die" while in battle, but that doesn't mean it's removed from your collection. It just removes it from battle and can't be used for the remainder of the battle.
- Wild battle pets do seem to have somewhat random stats, but there have been some consistencies that I've seen.
- If you're already in combat with another player or mob, it won't let you go into Pet Battle mode.
- When your companion levels up, it looks exactly like a character dinging.
- Currently you can have more than one of the same pet in your Pet Journal. Example: I logged into my horde toon and received some of the mailed pets and learned one (despite already having it in my Pet Journal). After learning it, I checked my journal and I had two of the same companion. (Unsure if this is intended or will change)
- The X/500 doesn't seem to be the max number of pets that are available to be collected. Instead, 500 seems to be the max number of companions you can have at any given time (includes duplicates and non-pets).
Here's some footage of the current iteration of Pet Battles. Showcases the overall battling phase (attacking, being attacked, switching pets, etc.), pet "death", capturing a wild pet, and leveling up a pet (unlocks a second ability).