The Spirit System is one of the various ways to enhance weapons and gear.
Spirit items (e.g. Soul of Fauna, Soul of the Spring, Soul of Rage) can be used to enhance items in your inventory by adding different stats. To do this, first make sure the item to be enhanced is not currently equipped. Next, open up your inventory and select the icon for the spirit item to be used, and drag it to the icon of the item you wish to enhance. A confirmation window will be displayed asking if you wish to imbue the selected piece of equipment with the spirit item.
Spirit items are specific to inventory slots. The item description will tell you which types of equipment is compatible (e.g. belt, torso, weapon).
When a piece of equipment is enhanced with a spirit item, an attribute of the item will be raised. If the imbuing process is successful, the item description will state what attribute has been raised and by how much. When you right-click on the equipment item, a new window will pop up with a full item description, an icon, and a small circle beneath the depicted item. This small circle will be filled with color when the item is enhanced with a spirit item.
Once a piece of gear is imbued with a spirit item, the only way to remove it is by soliciting the services of a Shaman NPC. These NPCs can be found in most town areas. The service to remove spirit enhancements from items comes at a cost and its success is not guaranteed. Through this process, it is possible that the piece of equipment may be destroyed. The likelihood of successfully removing a spirit item from a piece of equipment depends on the type of enhancement granted by the spirit item. Items called 'Soul Protection Seals' can be used by the Shaman NPC to increase the rate of success. These can be purchased in the Charge Shop with Pandora Points.