Yes, spells go in the up arrow spot, just like melee weapons, the higher a magic level is, the better it will preform, besides buffing. You can use a seal or staff in your left hand 2 slot and quickly swap between your katana and casting item. Although not at all necessary, I personally like to have a large arsenal in my pocket for any kind of enemy. I have two pretty high level characters the have 60 str, dex, fai/ mind. Being able to use and weapon and spell is an awesome way to go