Magic Essences are Items that are created from refining Whispers and Echos. The lowest level of this item can be purchased for 2s at many merchants throughout the world. Whispers and Echos can be directly salvaged from items.
So far all Whispers are Common Quality, all Echos are Uncommon Quality, and all Essences are Rare Quality.
The Talisman Making page has a list of magic essence names.
10 Whispers → 1 Echo
5 Echos → 1 Essence
To refine Whispers and Echos, simply right-click the whisper/echo you wish to refine.