You have 2 spaces to equip charms. Once they are equipped, they can offer many beneficial effects, such as health regeneration and toxic pools that can damage/kill enemies.
Level 1: White
Level 2: Purple
Level 3: Red
To complete a level 1 charm, you must equip a charm by going to your equipment screen and pressing . Then press or to get to the charms tab. Cycle through the various charms you have available and press to select it. Finally, move it to one of the squares at the top.
To complete a level 1 charm, you need to do two things:
Complete the quest associated with that charm. This quest can be in the charms description and could be anything from kill X amount of enemies to kill X amount of leaders to activate X amount of wells and so on.
*Note: To quickly complete the charm quest for activating wells, load up the first part of the world "Serpent" (3-1), and activate the well. Return to the ship and repeat.
Under the quest description, there will be various rune shapes to insert runes. Press while the charm is highlighted and then press to insert them (providing you have that shape). The color of that rune shape (under the charm quest description) will turn from white to blue. Repeat for all slots on that charm.
*Note: The color and property of the rune don't matter so long as you insert into the charm. Once they have been inserted, they are gone for good and you get no benefit from the ruin, So try and use the less useful ones.
Once the quest is completed and all the ruins have been inserted, you will have completed your level 1 charm.
Level 2 charms are completed by completing the task for the charm, but you have to insert completed level 1 charms rather than runes into them.
Level 3 charms are the same as level 2 except you have to insert completed level 2 charms instead of level 1.