Magic Tallow is an early "hidden" research that is used in a few other more advanced crafting recipes. When you unlock this research you also learn how to create Candle, which are basically just a better looking torch when crafted into a Magical Building Blocks, although one that can only be placed on a flat surface, not hung on a wall.
Magic Tallow is used in the creation of Tallow Golems and Tallow Candles (By combining a tallow candle with a dye in an arcane workbench you can obtain a coloured candle) .
If you have an alembic then Magic Tallow becomes an inexpensive way of creating Praecantatio: Simply place a magic tallow in your crucible and right click with your wand: You'll get your tallow back, with a profit of one essentia of pracantatio.
In order to craft Magic Tallow you need to add four Corpus and two ignis to a Crucible, and use 5 vis.