Go up and over the metal bridge for some optional stuff.
Go across the land bridge and continue right to progress.
Be careful with that Tanuki Dog battle; the second wave contains your first Giant Enemy! It'll probably have a level or two on your party, making it stronger, tougher, and harder to hit; the Eagle Eye in the chest on the other side of the log can help Anna counteract the last point.
ENEMY GROUPS
Obsidian Idol: Two waves (must be cleared to progress).