Went to the "second village" and did some side quests in and around the Tea House. Got stomped at one of the next parts and it sent me back to the start of the chapter, ignoring the 2 hours of side questing I did.

Thus, a forewarning to save often if you spend some time on the side quests.

Yeah, RPGs like this one could always benefit from a few more autosave spots. It seems like no matter how often I try to make a point of saving I always end up repeating significant portions.

I second this.

The game autosaves much too infrequently, especially for a recent-ish game.

A good rule is to save after every enemy encounter (or before any potential encounters).