Combine that with critical thinking of "there is no way that this option makes me fill out paper work in the menu"...
Ok, fair point

BUT!
Form is generally used to reference shape or layout "form the clay, THIS ISN'T EVEN MY FINAL FORM, Form up maggots!"
Your first two examples implies "Form" is generally used to change a single character, as opposed to your entire team. And I think other people would think the same thing (e.g. "What's 'Form' do? Oh, now cloud is selected. CAN I CHANGE CLOUD TO HIS FINAL FORM!?"). Ok, all my examples are terrible, but my point is that "Form" doesn't communicate you're performing an action on the team.
But I agree with you that pressing the button would allow anyone to very quickly understand the purpose of the menu item. "Form" works fine. And if "Formation" fit we wouldn't be having this conversation. But I'm not sure the shortened version (i.e. "Form") is a better name for the menu option than "Order".
Anyway, that's my two cents. I'm going to stop
https://en.wiktionary.org/wiki/bikeshedding now and get back to lurking...