Charisma represents how much personality a character has.
It's the base stat for the Mana Points and Spirit.

Mana Points (MP) are used by the Hero to activate special attacks (Powers). Each use of a Power consumes some of these points. If a Hero hasn't got enough MP to activate a Power, he simply can't use it. Drinking and resting refills this pool.

Spirit is used to calculate the damage of a lot of special attacks (Powers). The higher is this score, the more damage these Powers will do. Be aware that not every Power uses Spirit.