The Eye of Magnus is an ancient magical artifact first discovered by Atmoran settelers during the late Merethic Era, when the first group led by Ysgramor came to Skyrim and built the city of Saarthal.
After destroying the creature, Tolfdir sends the Dragonborn on an errand to research the Eye of Magnus (Hitting The Books). Finding the research material below Fellglow Keep, the Dragonborn reads more about the object in Night of Tears.
Afterward, Quaranir, a member of the Psijic Order, visits the Dragonborn, telling them the object is dangerous and to seek out the Augur of Dunlain. This then leads to the search for the Staff of Magnus.
After returning to the College, the Dragonborn learns that Ancano has tapped into the power of the Eye and gained tremendous power. The Dragonborn then has to travel to Labyrinthian to locate the Staff of Magnus. You must then use the Staff to break trough a magical barrier and use it to absorb the power of the Eye and so defeat Ancano. After Ancano is defeated, Quaranir appears and says that the world isn't ready for the Eye's unlimited power and that the Psijic Order will guard it. He and two other Psijic monks then teleport the Eye away.
Another possible origin that Tolfdir did not mention include the possibility of the Eye being Aedric in origin. The Aedric god, known as Magnus, created the Staff of Magnus, but it is currently unknown whether or not he actually created the Eye of Magnus.
- The color palettes may invert: the blues and blacks switching. This minor cosmetic bug corrects itself after a few minutes.