When a magic user casts a spell against a creature, the magic user's skill is compared against the magic resist skill of the creature to determine if the creature successfully resists the spell.
When an item is used to cast a spell against a creature, the Spellcraft of the item is similarly compared against the magic resist skill of the creature.
Spellcraft is also used when applying Silk to an item to remove allegiance rank, the new arcane lore requirement will be equal to the spellcraft of the item.