Here, the magicians will teach you how to use magic.
Also, this is the place to learn new attack spells.
You cannot buy higher level attack spells than your current magic skill level.
You can make magical items in the back room, if you have the appropriate ingredients and you know the correct quantity and order of them. Then - costing some silvers and Manapoints - you can make the item. You can learn the recipes in the pub from the old man or from other players.
Also, you can learn special spells here.