How to unlock Smash Flash 2 Characters time and or specific battles
As far as characters there are only two unlockables - Sandbag and Pichu.
Sandbag is unlocked by winning an online match.
Pichu is unlocked by dealing at or over 172% damage to Pikachu in one stock in a Human v. Human match.
As far as stages go, honestly you can find this on the wiki; just make sure you are looking at the current version of the game. Previous versions (like 0.9b) had different unlock rules.