Increases damage of an offensive spell. When upgraded through the use of Merit Points, all spells of the category (either an element, for Black Mage, or all physical Blue Magic for Blue Mage) upgraded will be enhanced. However, these merits can only be used when the Black Mage or Blue Mage is 75 (they will not affect you when you are in a level-capped dungeon, for example).
In the case of an upgraded elemental potency, the effect is calculated by adding +2 MAB when casting spells of the corresponding element.
See: Black Mage, Blue Mage, Merit Points, Calculating Magic Damage