I have a theory on what the Eye of Magnus actually is.
So, Magnus, the god responsible for giving Nirn and its inhabitants magic in the first place, created the Staff of Magnus. Technically speaking, it was just a staff he made so he could actually have a staff. Any other staff would just break under his power. He's just that strong.
The staff of Magnus, due to its purpose, is basiclly this giant ass battery. It can take any kind of magic, absorb it, and then use anything it absorbs all at once or in increments to do whatever the mage wielding it wants it to do.
There's a catch, though: The staff "Knows" how strong it is, and it doesn't like being used by a single mage for too long.
"Protecting the balance" and all that.
So, it'll just "Poof" out of anyone's hands if you use it for too long.
Here's where the Eye comes in.
What if the staff is like a green lantern power ring, and it needs to be powered. What if the Eye is the lantern?
Maybe the staff only "Poofs" out of your hands to refuel itself at the eye? Maybe that's the safeguard in place to ensure one mage doesn't hold the staff for too long.
Essentially, having both the staff and the eye would let you hold the staff forever.
This would explain why the Psijic Order didn't let the college keep the eye. The new Arch-mage has the staff. With the eye as well, the college is now home to a power rivaling that of Aedra, Daedra, and all kinds of mega-death inducing gods.
