The All is a spiritual energy which runs through everything that exists since the beginning times when the world was a dark and tumultuous place.
Neither good nor evil, it is part of the earth, the air, everything. The Nexus of The All is much more powerful than the Nexus of the Halliwell Manor. The All is the basis of all magic. According to Prue, the dome lets you tap into the point the user's power will eventually grow to. During a battle against Rennek, Prue fused her body with the Grimoire and the Empyreal Sword as well as The All, becoming The Nexus herself.
Beginning of Magic
Thousands upon thousands of years ago, a woman came across that Nexus. She alerted her mate to what she had found. At first, they were too afraid to go near it. Even at a distance, they could feel its power. But she pushed past that fear and tapped into this power. She was infused with more of the All than any human was intended to possess. The woman shared that power with her mate and it changed them, making them immortal and invulnerable.
It bonded them forever to one another and to The All, creating a state beyond consciousness beyond the known physical universe: The Higher Realm, a place of pure and utter bliss that they shared with the All. But their presence there affected the Earth. Their magical bond contained the All in the Higher Realm. The world started to die. The only way to save it was to separate the powers. To allow the power of the All to flow freely again, the woman and man were forced to abandon the Higher Realm, never to return again.
Origins of Witchcraft
Once back on Earth, the woman gave birth to a pair of children that were conceived while she was in the Higher Realm. The first child had powers like her mother, just not as strong. It is from her that most natural born witches descend. The second child was born with the same abilities, but he twisted the magic for darker purposes and gave rise to warlocks. The other children they had, the ones that came later, had no powers to speak of, but they and their descendants could tap into the magic as witch practitioners. In very rare cases, these non-magical descendants can give birth to a full witch.
Every time a witch is born, he/she inherits a tiny piece of the All, not a lot, but just enough to have an active power. With every new descendant, the All began to weaken, it was spread too thin. It needed to reclaim some of the magic it had lost, it needed one of them to return, this was part of the Grand Design. The Elders were forced to make a decision. Neena's mate returned to the higher plane, but he didn't abandon her, not by choice. One day, he was just gone and the woman was alone for the first time in forever. 
On All Hallow's Eve of the year 2000, the Charmed Ones were sent back in time to the 17th century by the witch Eva and her coven in order to save Charlotte Warren who was kidnapped by the evil witch Ruth Cobb in an effort to raise her daughter to be evil as she was prophesied to be a very powerful witch. As they or their powers didn't really exist in the past, the sisters had no access to their active powers so they were taught how to tap into natural magic by Eva. This was simple as the All can be easily tapped into on All Hallow's Eve, the day when magic is the strongest.
Battle for The All
After stealing Leo's subconscious magical knowledge, Rennek found the Grimoire (a powerful object of evil) and stole the Empyreal Sword (a relic of good), and used them to separate the magical flow, cutting Earth off from the Heavens and the Underworld—thus ending the struggle between both sides. However, a side effect was that magical beings were stripped of their powers and mortals gained magic. After learning from a seer named Alexi how Rennek took over the world's magic, the Charmed Ones formed a magical army to take back the Nexus of The All.
By absorbing the Grimoire and the Empyreal Sword, Prue gained power over the Nexus and used her new-found powers to vanquish Rennek and reverse his doings, then reconnected the Earth to the Underworld and the Upper Regions and erased all humans' memories of the past six months, turning their memories into those of dreams. She was then informed that by gaining control over the Nexus, she had become its keeper and was assigned to guard it, without ever leaving. The Elders assigned Cole as her assistant to help her stay connected to her family.
Prue as the Nexus of The All
After some time, Prue realizes that her sisters are avoiding her; her presence causes them physical and magical pain. Knowing that something is wrong, Prue reaches through time to summon a vanquished demon, Kyra, and threatens to destroy her with the Ancient Athame (which is capable of destroying a soul and possibly a demon's essence) if she refuses to help. Kyra then shares a vision with Prue, and she realizes that she has become one with the Nexus—the essence of the All now flows through her body, giving her limitless supply of power, but in doing so, her body is beginning to pull at what it had lost—the Power of Three. Because of this, she not only is hurting her sisters, but also every member in her family.
This problem is somehow removed when Prue accidentally merges with the Old One Heremus during battle. However, the demon's essence corrupts Prue and she turns against her family and the rest of the world.
Piper eventually stabs Prue with the Ancient Athame to stop her. The blade frees the All from its host while destroying the weapon and revives both Paige and Patience. Prue's soul was sent back to the Beyond. The All's current whereabouts and condition remain a mystery.
Role on the Magical Balance
Though The All flows evenly through all dimensions the Earth is the juncture point that links the Heavens and the Underworld with the magic that flows through the dimensions and that's why demons always want to take over; if they control the point of convergence, they can control the All. Because of this the Elders protect the Earth to keep the juncture point away from evil but recent events, such as Neena's dividing the Source's magic and Prue's return caused an unbalance in magic.
Thanks to this, a Darklighter named Rennek was capable of exploiting the unbalance by taking over the juncture point, the Nexus of the All. With that, he stripped magical beings of their powers and granted those powers to mortals and cut off the Earth from the Upper Regions and the Underworld—thus technically ending the struggle between Good and Evil.