You will likely need to use the recycler at the end of every dungeon run as part of your restock process.
Here’s how your recycler routine will probably look:
Click Add All Unidentified Items From Backpack using the single-click context menu (so it only takes magic items that you aren’t using)
If the recycler is full, Identify the items in the Magic Item Recycler (manually with the item identification skill, one by one with a magic item identification wand, or all at once using a container identification wand). If the recycler is full when you attempt to restock, it will leave magic items in your backpack.
For real, just use the container ID wand
Click Begin Recycle to recycle the contents of the chest with magic items.
If you need arcane essence, grab some before you leave.
Some context: I keep the items that I can use, my guildmates can use, and what I’d potentially be able to sell to others. Your preferences may vary.