You should make a fleet as soon as possible-the webstory will begin when all active players finish their fleets. Inactive players will have fleets made for them by government leaders, or, if they are the leader, the elected player (chosen among the other two people).
Battles will be resolved in the usual manner-see previous stories such as Endless War (although that isn't a particularly brilliant example, it works) or practically any EVO webstory to see. No links right now, I'm afraid, but I can get some if you need 'em.
See above for the start conditions.