The Book of Ages is a book that records history as it goes. Whoever writes in it has the power to alter reality. The Demon Sorcerers are afraid of its power.
Shendu sought the Book to change his and his Demon brethren's fates. He possessed Jackie Chan to make his way to Australia, where he begun writing some changes. He created a world where demons rule the world and humans are their ever loyal slaves. Jade Chan is able to escape the changes by accidentally ripping off her page in history.
Because the Book's location is well guarded and deemed No Man's Land, Jade assembles the J-Team, banishing four demons while doing so. Shendu becomes aware about Jade's work when he finds her still existing Moose watch and the remaining demons go to stop the J-Team. Jade decides to even the odds by using the book to empower the J-Team; Jackie grows to 20 feet tall; Tohru becomes a superhero; Viper is cybernetically augmented; Paco makes El Toro the same size but he and Jade constantly fight over making their hero bigger until Uncle tells them to write that he banishes the Demons. Once they are sealed, Jade then replaces the missing page with her name on it, restoring history to normal.
Given that Shendu made Jackie and Uncle and the Enforcers his slaves, it is unknown why he didn't did the same to Lü Dongbin and Lo Pei as revenge for what they did to him - banishing him to the Netherworld and turned him into a statue respectively.
Powers
The book's main function seems to be that it records history, though the enchantments allow anyone who rewrites it to change history to their whim. There seems to be no limit to what changes can be made, as Jade was able to write that the J-Team inexplicably gained superpowers and it happened. Uncle even gained the items and power needed to banish several demons simultaneously when Jade wrote that he did so. The main defense against the book's power is to obtain a piece of the book that details one's own history. History still changes around them, but they remember the unaltered version of the past, and can reverse the revision by returning the part of the book they removed.
Mythological Reference
The Book of Ages was probably inspired by the Jade Books in Heaven in Taoist mythology. It is described in several scriptures of the Daoist canon as existent primordially in the various divine Heavens. These Jade Books are variously said to be instrumental in creating and maintaining the divine structure of the universe, or as regulating national or personal destiny.
It seems that the Book of Ages was one of the Jade Books that was placed on earth at some unknown point in the past.
When Shendu suggested to use the book as their last resort to escape the Netherworld, the other seven Demon Sorcerers were shocked. Dai Gui thought Shendu's plan was ludicrous. A shocked Hsi Wu said even they didn't dare to tamper with that. Bai Tza added that Shendu will risk altering the very fabric of reality.