Aura

Aura is the manifestation of our soul. It bears our burdens and shields our hearts.

Aura is the closest thing the RWBY world has to 'magic'. It is an energy used by those with souls. It seems to serve as the ignition or primer for Dust in weapons, as well as a way to defend and even heal wounds. It is stated by Pyrrha that those without souls are unable to wield Aura, hence why the creatures of Grim are unable to do so.

Abilities
Aura is a necessary energy source for all Hunters, being their most powerful ally when in battle. Aura, as demonstrated by various characters, has the ability to do the following:
 * Defense: Demonstrated by Ren in the forest, and explained by Pyrrha. The use of aura is mainly for defensive purposes. Ren used his to block the fangs of a gigantic snake creature that was attacking him. It is also used by him to force a fang through its skull.
 * Offense: Demonstrated by Ren in the forest, as he sends a shockwave of force through the snake's head, causing it to explode. Additionally Pyrrha has stated that all tools and equipment are conduits for a person's aura.
 * Unlock Aura: One's aura can be use to 'unlock' anothers as shown by Pyrrha who unlocks Jaune's aura.
 * Healing: It also seems that those with a strong enough aura can heal minor wounds used by Jaune directly after having his unlocked.

Activation
It is appears that aura is able to manifest in different ways and when in use it takes on the colour of ones inner energy. It appears as a slight glow around the body and also seems to be able to change eye colour.

By the looks of it, the activation of an Aura requires not much more than training and willpower.

How the aura manifest seem to vary from people to people depending on their personality. Yang's aura is shown to be powerful and bludgeoning because her head strong personality, while Ren's is piercing and direct for his calm and serious one.