A soul stone is a Necromantic artifact similar to a soul gem, but more versatile in its applications. Soul gems can only store souls for transport; putting the soul back into a body frees it from the soul gem. A trapped soul can be used as a sort of magical battery, but that is the limit of its usefulness.
Soul stones are more flexible than this; not only can souls be placed into them or taken out, but a soul bound to a soul stone can be used to animate a body or automaton while still remaining bound to the soul stone. The Necromancer can call the soul up into its vehicle or dismiss it back to its soul stone at will, at any time; he can also swap in new vehicles for old ones, make improvements to the vehicle, and issue commands that the bound soul must obey. One Necromancer created a bodyguard for himself by binding a human soul to a preserved dragon skeleton; the undead creature was powerless to disobey him, though it could still voice its opinions unless he bade it to be silent.
Being bound into a soul stone is less likely to produce madness than being bound into a soul gem, where the trapped soul can sense nothing outside itself. On the other hand, the forced servitude and mind control imposed on a creature bound to a soul stone have their own effects, and can break the creature's spirit and will if it is pushed too often to do things that are contrary to its own nature. Not all uses for soul stones are inherently cruel, however; a Necromancer might have himself bound to a soul stone in order to swap bodies with someone else, or he might give his servants an "upgrade" from their weak human bodies into more formidable ones. Despite these less sinister uses, however, soul stone magic remains far too powerful and far too dangerous to be left in the hands of mortals; the Pantheon, gods and daedra lords alike, have declared a ban on this magic, and anyone who uses it or teaches it to others is likely to be pursued and killed by the servants of both sides. Few Necromancers alive today retain the knowledge and skills necessary to craft soul stones; most of the books that contained such knowledge have been destroyed, and the few that survive have been locked away in the secret libraries of the Lothanasi and other powerful religious groups.
Soul stones vary in their appearance; many resemble polished stone disks, about the size of a man's hand, covered in elaborate arcane sigils. They are more resilient than soul gems, and many can be broken only with enchanted weapons. They are also much more expensive and time-consuming to produce than soul gems. The daedra lords seldom have use for them — they have more efficient ways of coercing people to do their will — so the only people likely to be found employing them are old and powerful Necromancers.