Character knowledge, matchup knowledge, execution, reactions, and reads. Everything a player needs to be successful at SFV falls into one of these categories, and a player needs all of these things to be successful.
Character knowledge is knowing not only what your character can do, but when to do it and why. Know the properties of your normals and specials and when to use them. Know your optimal combos and use the best one for the situation every time. Know your anti airs, frame traps, pressure strings and set ups. Know your weaknesses.
Know your enemy. Matchup knowledge is the same as character knowledge, but about your opponent and how your character interacts with them. You need to know the properties of their normals and specials. You need to know their frame traps, pressure strings and set ups. You don’t have to know all their optimal combos, but you do need to know what can (and can’t) be punished and how to punish optimally. Knowing each characters strengths and weaknesses allows you to create an effective strategy for the matchup.
All the knowledge and strategy mean nothing without execution. Execution means making what you want your character to do, happen. It means being frame tight on your setups and not dropping combos or using a Critical Art when trying to Dragon Punch. It means not losing when you should have won. Having a high quality controller you’re comfortable using (stick or pad is personal preference) and practice is the only way to improve your execution consistency.
The faster you can correctly react the better you will be at SFV. While there is a built-in level of lag which changes the things that are reactable or not, you must be able to correctly react to the reactable. Your ability to block, tech throws, anti-air, punish, and hit confirm are all tied to your reaction speed. I believe anyone can reach the peak human reaction speed with enough training, but correctly reacting and being ready to react is more difficult.
When you perform a hard counter to an unreactable move you get credit for making a read. A successful wakeup DP, a jump in over a fireball for a big combo, and air throws are read based options that are used when you can predict your opponents actions. Recognizing your opponents tendencies and patterns while remaining unpredictable yourself is the goal. Short of developing psychic abilities, post match analysis and plain old experience are the keys to developing your ability to make reads.