It adds elemental properties to your regular attacks. Since there are 8 elements in the game, there are 8 different auras. The effect is cumulative, meaning that each new aura you get doesn't REPLACE the old one's effects, it just adds to them. After level 8 there's really no point in levelling it up. Here's a key to decipher the mystery:

White Aura = Ice element
Yellow Aura = Body element
Green Aura = Poison element
Black Aura = Death element (yes, death is an element. Don't ask.)
Blue Aura = Thunder element
Orange Aura = Mind element
Red Aura = Fire element (quite a bit of rigamarole for a simple flame attack!)
Dimension element

All growing magic relating to elemental properties (which is basically just Aura, Dispel and Barrier...) follows the same progression sequence.