Basically, mana stones are one of the things used to make equipment more powerful. Every item has a tier, all the stuff you find at 40+ is tier 3. For every tier over 3, an item gets a 10% boost to all stats. So a 600 damage staff with 10 int on it that you tier to 4 will then deal 660 damage and have 11 int.

To tier an item, you need to transmute it with 3 mana stones of the tier you wish it to be.

To make a mana stone, you need to combine one item with one fusion stone. Because the highest tier item you can find or buy is t3, you can only make t3 mana stones.

To make a higher tier mana stone, you need to combine 3 of the same tier to make one of the next highest tier.

So, to make the t4 item from the example, you would need 9 t3 mana stones, in order to make 3 t4 stones, so you could tier one item to t4.

You can also tier an item to something higher. I took my own staff from 3 to 6 in one hit, but the higher you go, the more gold you need to buy items, and the more arcane transmutor charges you need. To make a tier 3 item t6, you need about 120 arcane transmutations. to make a t10 (the hypothetical max), you need about 10,000 transmutations.

You get 10 charges for getting to level 10, and then you can buy more at a rate of 1 charge for 30 daily tokens, of which you can get 100 per day.

So being able to powerlevel 5 toons to 10 in 20 minutes is very valuable.

There's also some fun stuff with the stats. If you have questions, ask them!