FePS3 is a layered van der Waals (vdW) Ising antiferromagnet that has recently been studied in the context of true 2D magnetism and emerged as an ideal material platform for investigating strong spin-phonon coupling, and non-linear magneto-optical phenomena. In this work, we demonstrate an important unresolved role of spin-orbit coupling (SOC) in the ground state and excitations of this compound. Combining first-principles calculations with linear flavor wave theory (LFWT), we find strong mixing and spectral overlap of different spin-orbital single-ion states. Low-lying excitations form hybrid spin-orbit exciton/magnon modes. Complete parameterization of the low-energy model requires nearly half a million coupling constants. Despite this complexity, such a model can be inexpensively derived using local many-body-based approaches, which yield quantitative agreement with recent experiments. The results highlight the importance of SOC even in first-row transition metals and provide essential insight into the properties of 2D magnets with unquenched orbital moments.