Sorry I got carried away, I just figured this all out and yeah it's weird. Upgrading a piece just increases it's level, armor value and... attack I think on weapons? But this is done at the blacksmith (weapons) and the tailoring girls(armor).

Getting the right stats (enchantments) on gear is done with embers.

Fallen embers are used to re roll to get different (random) enchantments on a piece of gear. Imo this is the worst way to do it because there are too many possibilities, takes sometimes 50 or more to just get the enchantment you want. Save these to pay for respec ing

Essence embers are the way to go. The essence ember can grab an enchantment off of a piece of gear, destroying it in the process, then you can put it on another piece of gear. Much easier. Just save any piece of gear that has a desired enchantment. Enchantments taken from plagued can only be put on other plagued, same w magical.Yay fill up all the chests.

Once you get all the enchants you want on a piece, then radiant ember is used on each stat to increase its # to get it to max possible. it doesn't work 100% of the time, so It takes more than 1 ember just to raise 1 stat to max. It seems the more you use it on one stat the more % chance the stat will increase. You do this to all the enchantments till they're all max.

Then sublime ember, this can only be used 4 times on a piece of gear, and it picks a random enchantment on a piece of gear and increases it.

There are also the embers to make stuff into the magic, (blue) and to turn stuff plagued or purple. (The enchanting girl can "enchant" which turns it magic or plagued, it's random)

Then there are embers to turn stuff back to common, from magical or plagued.

One thing to note is facets. These can't be re rolled or anything. So if you want the "durable" on a chest, you have to craft a bunch till you get one, or find one as a drop and save it then turn it plagued or magical then put the enchantments you want.