Jewels are used to upgrade equipment with different stats. Every Jewel gives different stats to different equipment and every part of the equipment has its own gem with own stats. They can also have ranks and can be enhanced by combining two of the same rank. They are placed by clicking with shift and right mouse button on the desired equipment. (You can CTRL+ right click to swap jewels and equipment at the same time).
Runes are items dropped by mystery rune boxes mainly obtained from PVP. They are used to give rings, necklaces and earrings elemental defense. They have different levels and give more stats the bigger the level is.