As of patch 1.48.6 the Star Altar is now where you go to find Dust/Scrap in order to upgrade your spells and equipment.
When you first click on the Star Altar you will be brought to this area, you will see there are different colour scraps for equipment and different colour dust for abilities. Click into the resource you are looking for.
In order to make "Scrap" you will need to place two items into the Altar, the total value of both items are transferred to your reward.
In order to make dust you will need to offer two spells of the corresponding colour to the Altar
Once you have chosen the items to offer to the Altar, you can chose the Battle mode, the harder the mode the more scrap you will win.
Once you are satisfied, press make offering, once you do this you will be placed in the Star Arena to battle the Elementals at the Altar. You have five chances to defeat the Elementals, please note if you lose the battle, you lose your offerings. If you win, the resources are stored at the Star Altar, once you have enough resources you can go to the Mage or Blacksmith to upgrade your spells/items.
Scrap and Dust can also be exchanged or sold at the Altar. You can exchange the Scrap or Dust for that of a higher value or you can sell it for Gold.
You can use the Arrows to chose how much Scrap/Dust you wish to exchange or press "Min" for the minimum amount.