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.).