The Inscribed Spellblade is a magic-aiding sword given to the champion by Dominika. It's covered in the same runes that coat Dominika's body. The champion must have obtained Zetaz's Map and have allowed Dominka to preform oral sex on them to obtain the Inscribed Spellblade.
Inscribed Spellblade Much as you anticipated it is indeed a sword, though one with strangely familiar lines and patterns engraved along its pommel and blade. "My people found that it was best to perform magic with something that could - if necessary - also serve as a weapon on its own. A crystal orb or stick tends to simply leave an opponent lightly bruised if employed as a weapon, rather than drawing blood." She reaches across the table and traces the lines on the blade with her finger. "These inscriptions are based on the movement of the stars, and will draw power from them to enhance your magic - though admittedly given the difficulty of seeing the skies in this land, it's not as powerful as it would have been in my homeland." The connection to the night sky triggers the memory of where you've seen similar runes: Dominika's tattoos draw on the same iconography.
Forged not by a swordsmith but a sorceress, this arcane-infused blade amplifies your magic. Unlike the wizard staves it is based on, this weapon also has a sharp edge, a technological innovation which has proven historically useful in battle.
The Inscribed Spellblade can be given to Asa Mali, as part of Dominika's quest. However, as the quest is incomplete, doing so serves no purpose besides removing the weapon from the game.
Curiously, the Inscribed Spellblade is the starting weapon of Charaun, Mihari, and Siveen, all pre-made champions that hail from Ingnam, despite the Inscribed Spellblade being something from Dominika's home-world culture. It is unknown if this was intentional and meant to imply something or the staff who made the pre-made champions didn't consider this fact.
Charaun is stated to have magical powers. It's unknown if this was meant to be the justification for the Inscribed Spellblade or not.
It's worth considering that the coding notes for Mihari state, "//I'm kinda going under the assumption you are letting us go hog wild if not, take what's allowed and do what you wish out of what's below". It also says, "//starting weapon: Spellblade if not gamebreaking otherwise spear is fine." just before the code to assign weapon and armor. It is unknown if that means the Inscribed Spellblade's origins were ignored or not.
Siveen is described as an "angel from beyond", which allows for more flexibility in picking items and such that aren't native to Ingnam.
The Inscribed Spellblade shares its perk name with the Wizard's Staff and Eldritch Staff, albeit having a different boost than the other two.
Dominika states that if the skies were more clear, the Inscribed Spellblade would have a much higher boost. However, even after the skies are cleared, the boost remains the same.
It was suggested that the Inscribed Spellblade could have "some crazy additional magic effect" if not grant the Wizard's Focus perk.
Weapons are equippable items used to boost attack, among other effects.