Replay value. It's the same thing as New Game except that you get to keep all
the stats and levels of the characters from the previous game save state, as well
all the items and weapons in your inventory. It also means that all the chests have
been replenished and all the Tabs are right where they were before, so your characters
can be near invincible. It is also easier to defeat Lavos just from being leveled up.
However, the best reason for using New Game + is so that you can see the many endings
throughout the game.
To use this feature, select New Game +. Then, select the save state slot that you want to
carry over your items and levels from. After that, you're all set. The only really "new thing"
from using this feature will be that there is now a glowing dot on the right pod of the Telepod which
will warp you directly to Lavos.
Carried over items:
Key items (ie: Hero Medal, Masamune), original equipment (ie: wood sword), and your money
will not be carried over. Ozzie, Slash, Flea, and Taban equipment will also not be carried over
to the new game.
If you defeat Magus, you'll receive his Amulet. If he comes with you, you'll receive his amulet. If
you want to keep the amulet on New Game +, you must equip it onto someone else other than Magus before
you save the game which everything will carry over from.
Since Frog's Masamune cannot be carried over, make sure you buy Frog a good weapon before saving.
Since you can't keep your money but you can keep your items, then obviously there is only one
way around it. You'll have to blow all your money on items before saving the game. The items will
carry over and you can just sell them to get needed money. They may only sell for half the price you
bought them, but atleast you get to keep half of your money and not none of it right?