The Protection spell is a magic spell that makes the user immune to any kind of damage as long as they have magic points. The only thing that the spell doesn't protect from is instant-death falling (into the water, lava or gas or from a great height). The spell consumes 1 MP/sec when active and starts to flicker when there are less that 10 MPs left.
Getting the Protection spell is truly optional. The game, however, becomes much more challenging at later stages without it.
"This Tunic, bequeathed by your ancestors, now gives you protection besides storing Magic. To use the shielding spell, press Enter from the Inventory. This spell consumes some Magic, just like throwing the Ball and using several other magic objects."