It's stated in the controls screen what the Fairy's abilities do/how to activate them in more detail, and for Soul (The green one depicted here), you switch between two modes, one that is better defensively and the other that works very well offensively. It seems as though you stayed in the defensive mode, which deals reduced damage. If you never switch to the offensive mode, yes the game is going to be quite difficult. I'll see what can be done about making it more clear that the stance change is an option.