Despite being a core mechanic of Final Fantasy VII Remake, the shiny magic rocks known as materia haven't really reappeared between the original game's release in 1997 until now. It's an important but complex system that could use a little explanation, as the games are less about the innate skills of their characters so much as the power they've earned using materia.
The origin of materia is central to FFVII Remake's story, and it starts at the center of Gaia, where an ethereal energy known as the lifestream flows. This energy's origin is a mystery to be solved in the game, but what is known for certain is that it holds immense power and vast stores of information. When the lifestream pools into a liquid it forms mako, the primary fuel source for the world thanks to the Shinra electric company and its reactors.
Almost all known materia was artificially synthesized with compressed mako by Shinra, but it's rumored that mako can sometimes coalesce on the surface in springs and crystallize into natural materia. From lifestream, to mako to materia, the power and information contained inside never left, which is why people can learn abilities from these rocks.
Prolonged exposure to raw mako is extremely dangerous and can lead to mutation, poisoning, madness and cool glowing eyes. However, these side effects don't apply when handling materia. This makes materia an ideal tool to upgrade rank and file security with a little extra firepower without the intense conditioning needed for members of S.O.L.D.I.E.R. As a mako byproduct, materia is largely controlled by Shinra. Due to this, even though it might have many broader applications, it's mostly used as a weapon.
Materia appear as spherical gemstones that can be found throughout the world of Gaia. You can receive them as quest rewards, buy them as store items, find them hidden away or grab ones that are laying out in the open. Equipment on Gaia is designed with sockets to set materia into, and there are good reasons to decorate your weapons and armor in jewelry (aside from being a bold fashion choice). This is because of the immense power contained in the tennis-ball sized stones -- setting materia into your equipment will grant you new spells, abilities and stat bonuses as long as you keep them.
There are five main types of materia, each with a unique color and powers. Magic materia is green and allows you to cast spells. Command materia is yellow and grants you new abilities. Support materia is blue and grants a passive bonus to something such as spell area or basic attack damage. Complete materia is purple and passively increases your stats like Max HP or MP. Summoning materia is red and allows you to unleash powerful magic beings to fight by your side during tough encounters.
Additionally, there are other, extremely rare, materia with exotic and legendary powers of their own.
Materia contains both power and knowledge, and all materia can grow in power. As you fight battles and earn ability points, your set materia will automatically level up and unlock stronger versions of their abilities. The materia doesn't even necessarily need to be used during battle, allowing you to quickly gain progress without the need to grind a specific spell or power. The star rating on any given materia represents its level and after it reaches max level it is considered "mastered."
Collecting and setting single materia for its abilities is a good start, but you will want to take advantage of the materia system's full depth. Setting multiples of the same materia won't stack its effects, but blue support materia fills this purpose perfectly. When you are looking at equipment, keep an eye out for materia slots that are linked together by a black bar, as these are key to using support materia. When a support materia is linked with magic materia, you'll get an enhanced effect. For example, if an Elemental materia is placed on a weapon, you will gain extra elemental damage, while if placed on armor, you'll gain resistance to that element's damage type.
Another powerful support materia is Magnify. This blue materia can effectively combo early in the game with supporting spells such as Barrier or Regen for an easy way to maximize your magic's efficiency. Switch it onto your high damage spells to create area of effect blasts once you've earned them. Combine it with Aerith's Arcane Ward to copy the spells you Magnify for a potent elemental storm.
One of the system's strengths is how it rewards tinkerers and perfectionists for optimizing, but doesn't make heavy engagement totally necessary. You don't need to get amplified healing or 200 percent stagger, but you feel rewarded for achieving it. There are plenty of intricate combos possible in Final Fantasy VII Remake, so keep experimenting with them until you find what works best for you.