The battle at Fort Condor is a mini-game that you can play at Fort Condor at a number of different points in the game. The rewards change each time you successfully complete the mini-game.
There is also one part of the game that requires you to play the mini-game (when recovering the Huge Materia on Disc 2) however you can avoid playing the mini-game at that time and just purposefully lose (in order to battle the mini-boss, CMD. Grand Horn).
The battle at Fort Condor is similar in style to a “tower defense” style game. The objective is to strategically place defensive units to prevent enemies from reaching the top of Fort Condor. Each defensive unit that you place costs a specific amount of gil. In fact, the man at the top of Fort Condor will not allow you to initiate the game unless you have at least 4,000 gil in your possession (and you will want more than this for sure).
The game is over if CMD. Grand Horn is defeated or if it reaches the top.
Place your Fighters and Attackers as close to the lower limit line as possible and add in a Repairer if you have enough gil on hand. The best strategy is to go all out on the offensive.
Aside from the forced battle on Disc 2, you can actually return to Fort Condor many other times throughout the game and the prizes will be different:
Battle 1: This is the very first battle that can be completed after exiting the Mythril Mine and heading straight to Fort Condor. The prize is a Magic Comb.
Battle 2: After Cloud and the party rest in the house in Lower Junon after defeating Bottomswell and rescuing Priscilla. The prize is Peace Ring.
Battle 3: After getting in the water with Mr. Dolphin but before using the Dolphin Whistle. The prize is 3 Ethers (mislabeled in the game as Tinctures).
Battle 4: After getting the Buggy and leaving Gold Saucer but before arriving at Cosmo Canyon. The prize is a Megalixir.
Battle 5: After entering the Cave of the Gi but before obtaining the Tiny Bronco. The prize is 5 Hi-Potions (mislabeled in the game as 5 Potions).
Battle 6: After completing the Cave of the Gi but before speaking with Shera in Rocket Town. The prize is a Superball.
Battle 7: After speaking to Shera in Rocket Town but before talking to her again after Rufus arrives. The prize is 3 Turbo Ethers.
Battle 8: After obtaining the Tiny Bronco but before obtaining the Keystone. The prize is 3 Turbo Ethers.
Battle 9: After Cloud goes on the date in Gold Saucer but before arriving at the Temple of the Ancients. The prize is 3 Turbo Ethers.
Battle 10: After completing the Temple of the Ancients but before obtaining the Lunar Harp in Bone Village. The prize is 5 X-Potions (mislabeled in the game as a blank box).
Battle 11: After traveling through the Sleeping Forest with the Lunar Harp but before arriving at the Forgotten Capital. The prize is 5 X-Potions (mislabeled in the game as a blank box).
Battle 12: After the team spends the night in the Forgotten Capital but before traveling down into the Forgotten Capital to the end of Disc 1. The prize is 5 X-Potions (mislabeled in the game as a blank box).
Battle 13: At the beginning of Disc 2 but before obtaining the Highwind. The prize is 3 Elixirs.
Battle 14: This battle, and the 4 that follow, cannot be completed. They were added in during sections of the game where the team cannot travel on the world map.
Battle 15: See above.
Battle 16: See above.
Battle 17: See above.
Battle 18: See above.
Battle 19: After obtaining the Highwind but before traveling to Mideel. The prize is 3 Elixirs.
Battle 20: This battle also cannot be completed as it occurs during the events in Mideel.
Huge Materia Battle: Mandatory for the story of the game on Disc 2.