Beat the main Story Mode on any difficulty multiple times to unlock an extra stage and more characters.
Unlockable: --- How to Unlock:
Alice --- Beat Story Mode twice
Bunny Girl Snow White --- Beat Story Mode three times
Dorothy --- Reach Stage 2-1 in Story Mode
Little Red Riding Hood --- Beat Story Mode four times
Snow White --- Reach Stage 3-2 in Story Mode
Survival Stage in Arcade Mode (Pirate Ship) --- Beat Story Mode once