PvE is player vs Enviorment/Enemy idk what it stands for it's just fighting computer mobs. and the clothes you got from shenron are broken. get them repaired
crafting hasn't been implemented in the game yet. only basics crafts that suck. and as of good clothes. check the AH and your bound to find something you'll like
AH is auction house. Its a capsule looking thing in Kokkara that everyone sits around. and tier 2 dragon balls you just need to kill mobs that are your level or 5+ your level with the dragon ball emblem on them on your minimap. here is a full guide how to get them