The ball can be thrown in different trajectories depending on the behaviour of Twinsen, and will bounce on different surfaces a couple of times before returning to him. Each ball throw consumes 1/2 MP and if he doesn't have any, it can still be thrown, but it won't bounce. In LBA2, by pressing the fire button again while the ball is en-route, the player can make it return prematurely.
As Twinsen acquires new levels of magic as the plot progresses, the Magic Ball is upgraded to Green Ball, Red Ball and finally Fire Ball. Each upgrade allows it to hurt new kinds of enemies and deal more damage to previous ones. Enemies that can be hit with a ball of a certain color are generally styled in the same color. Twinsen's hand-to-hand attack can hit the same enemies as his current level of Ball can.
LBA: "Magic Ball. Each time you reach a higher level of magic, the Magic Ball's striking power will increase. Its trajectories will also become more effective with each new level, as long as you have enough magic in stock! The Ball will use up magic each time it is thrown."
LBA2: "You can throw the Magic Ball and make it bounce in different ways: For that, you need the Tunic since it allows you to store Magic power that the Ball consumes at each throw."