What are the effect/use of the "silence" spell/scroll/potion?

Your enemyes can't cast any spells while they're silenced

I like to use it on arrows when starting a fight with any spell casting enemy - that includes almost all humanoid opponents. Good stuff

Sweet... I need to get myself a bow and some arrows then. I haven't bothered with those yet as I usually carry around so much crap anyway...

Yep. The flip side of that is when an enemy casts silence on you - how annoying!
Even though I'm mostly a fighter, I mix in spells and hate it when I get silenced. You'll want to have dispel potions handy.