At the enchanting station you can upgrade (enchant) your lower grade gems, tools and ability stones to get higher grades.

Here you can see the table of enchanting:

6x G1 Gems -> 1 G2 Gem

4x G2 Gems -> 1 G3 Gem

2x G3 Gems -> 1 G4 Gem

2x G4 Gems -> 1 G5 Gem

2x G5 Gems -> 1 G6 Gem

2x G6 Gems -> 1 G7 Gem

6x G7 Gems -> 1 G8 Gem

For upgrading Tools and Ability stones you will need two of a lower grade to receive 1 of a higher grade (example: 2x G7 Jewelry tools -> 1 G8 Jewelry tool etc.).