From what little information Jakob knew and could decipher from the books that he had, the Artifact was created by Death and given to an elemental in the past. The reason seems to be lost in history but it became something that was desired by all creatures — humans AND elementals. When touched, the Artifact creates a bond between a host and itself and the only thing that can sever that bond is the death of the host. Since the Artifact requires a host, when the host is about to die, it broadcasts a signal out to other elementals that it is in need of a new one. There is no requirement that the host has to be an elemental but the signal can only be heard by them. 

Once a creature touches the Artifact, a melding process begins. The host and the Artifact form a mental bond as it assimilates itself into the very structure of the host. The Artifact has the ability to alter the host’s body by creating armor and weapons sufficient to protect the host. It may alter the entire host’s body or just portions of it. Along with this benefit, the Artifact can communicate with any elemental or transform the host fully into different elementals. 

Ultimately, though, its primary duty is to protect the host. 

Since the Artifact is a part of Death, it has retained a somewhat limited ability to transform other creatures. For example, elementals can be transformed into humans and vice-versa. 
Each transformation, though, costs the host a part of his life force. Eventually, he’ll die and then the Artifact will have to find a new host. Jakob assumed that this was how my father was able to turn Kira into a human.

The days passed and the learning continued but I didn’t learn much more about the Artifact and couldn’t figure out how to communicate with it. Nor could I figure out how to apply the transformation. However, this new knowledge did seem to comfort me more and more. The nightmare still came but I tended to be running less and less. I would just accept the darkness to take over me and then wake. 

However, I just wished that it would stop.