Lore skill determines a character's ability to decipher information and put together clues from fragments of information. This skill is critical for magic users who wish to learn new sigils to power their spells. Lore is also used in dialogue to determine what you know about the history of the world or to impress others with your intelligence.
Compared to other support skills, Lore checks give the least amount of experience points, which is probably to be expected, as it is relatively easy to improve the skill via spellcasting. Therefore, before you choose to use this check, consider your audience; some characters do not appreciate you flaunting your knowledge.