The Dagon Sphere was a mystical crystal ball created to repel That Which Cannot Be Named. More specifically, it is a protective device with a history going back many centuries, and mainly used to ward off ancient primordial evil.
CharacteristicsThe orb was small and could be held in one hand. It continuously gave off a yellowish glow. Its glow became sharper and brighter as it reacted to a powerful evil being. As Giles had explained, anything that goes unnamed is usually an object of deep worship or great fear - maybe both, and in other words, to be seriously reckoned with too.
This theory was later confirmed when it was revealed that Glory, the enemy Buffy was forced to confront in on her 'big day', was actually a highly dangerous, mentally unstable Hell-Goddess who had been banished from her own dimension for becoming too powerful and ruling too viciously. In the final battle against Glory, the second weapon Buffy employed against her was the Dagon Sphere, which Glory managed to crush into pieces by brute force, but not before causing her some degree of physical pain, and presumably lowering her usually formidable strength.