The screen gets redrawn every frame which makes it as slow as it is, unfortunately. The objects that you see are actually tiles that are 1 level higher than the floor. The masking is pretty simple, transparent all around except the actual block. Except the transparent blocks that I made that are, well, transparent haha. The tiles are drawn from the top left corner to the bottom right corner, starting at the lowest depth level and progressing to the highest.
I believe lookitsan00b already made an isometric engine with Axe, actually, although I can't find it atm...
No, you are right, he is falling through the floor. I have to fix that.
This runs decently at 15mhz, but I can't really figure out what I want to do with it. It's too slow to handle any kind of enemies or anything, as well as any extra physics to play with. I might actually move on to another, more traditional 2d entry if I can't speed it up/think of something...