Item Lore, also known as Item Identification yields information about the resources an item is made of, it’s market value and it’s magical effects, if any.
On active use, it identifies weapons/armor, listing their properties (including magical effects) and removing the “(unidentified)” flag.
Notice that you only take advantage of magical effects from weapons, artifacts and other magical items if they are identified (this doesn’t include non-magical effects, such as properties related to material or crafting quality).
On passive use, 30% item lore is enough to read numeric information on an item’s properties (eg: “30% Enhanced Damage” as opposed to simply “Enhanced Damage”). This same effect can be achieved with 30% arms lore.