Thanks for playing, glad you enjoyed the bits you explored!
For the "crafting" you have to talk to the villagers behind market stalls, it's more of a trading system, I believe one of the NPCs should explain it, but honestly had some issues with them so there's a chance one of them just stopped talking for some reason :)
As for the Kaiju, it's the storyline of the game. Right at the end (when you go to the purple hole) there's a cutscene where the kaiju destroys the world you've been exploring, unfortunately it's nothing more than a cutscene and some references from the villagers in the game's current state, but it is there :D
Anyway, thanks for playing!