All of the magic skills in Nehrim serve two main purposes;
1. At lower levels (below 40-50), you need a certain skill level to learn higher ranked spells
2. At all levels, higher skill level reduces the cost of spells
For example, at destruction level 20, Your skill level isn't even high enough to learn the Rank IV fireball. Even at the minimum required destruction level for the spell, it will use most of your Magicka, and you will probably still do more damage spamming Rank II or III fireballs. By 100 destruction, the Fireball IV spell will be cheap enough that you can cast it all over the place.
Long story short: higher magic skill level means you can cast a greater number of higher level spells.