Although it is called Spell Damage, it may be useful to think of it as 'Spell Power,' since it also increases the amount of healing done by spells and abilities.Poisons of Increase Spell Power grant Minor Sorcery.Potions of Increase Spell Power grant Major Sorcery.Entropy - grants Major Sorcery for 20 seconds.Illuminate - grants Minor Sorcery to you and allies for 10-20 seconds when using any Dawn's Wrath skill.Power Surge - grants Major Sorcery for 33 seconds.Sap Essence - grants Major Sorcery for 20 seconds At Higher Levels: When you cast this spell using a spell slot of 4th level or higher, the damage increases by 1d6 for each slot level above 3rd.
The reason for this isnt because of something that Spell. Your Spell Damage can be improved by many sets (click for complete list), as well the Major Sorcery and Minor Sorcery effects, which increase your damage by 20% and 5% respectively. Spell Damage represents the damage done by spells or abilities with a Magicka cost.