In Outlands, very few items have no practical use. In fact, many resources have multiple uses, and that includes magic weapons and armor. If a magic item is not good enough to keep, recycling it gives you a few raw materials and the super important arcane essence.
Arcane essence is used primarily for fueling your aspect, and you will always need more of it.
Anyone can recycle identified (yes, you have to identify first) magic items using any crafting tool, no minimum crafting skill required. When you start running dungeons consistently, though, you will accumulate a lot of magic items. Sorting and recycling all of them will get so tedious that you wish you had a one click way to empty magic items out of your bag and to sort them by quality for you.
Introducing the Magic Item Recycler!
To get the utility out of the magic item recycler, you need to spend a few moments setting it up to your preferences.
A. Adds magic items to the recycler from the container you target (usually yourself or your backpack.
B. Helps you sort magic loot from your backpack into the recycler based on your recycler preferences (I’ve never actually had to use this)
C. Empty the contents of the recycler into a target container (haven’t used this either)
D. The items checked in this menu are the items that get recycled (the items left in red are preserved and DO NOT get turned into arcane essence)
E. Cycle through categories of item types by checking the diamonds in this bottom row
F. A description of your most recent action with the recycler.
G. Keeping Recycle All Categories checked ensures that all item types are recycled.
H. Clicking this blue diamond recycles the contents of the chest, leaving the items you chose to preserve and turning the others into arcane essence/crafting materials.
Note: All of my preferred recycler settings are at the end of this guide if you want to copy what I do.