You receive this from the monk in the Devious Minds quest when you give him the Bow-sword.
Uses:
You have to put this into a large pouch in the Devious Minds quest to get a large pouch with an orb in it, you have to use that to fool the monks of Entrana so you can take the orb to Entrana.
Notes:
You will lose your large pouch in the quest so think wisely before putting the orb in the large pouch.