Soul Gem

A soul gem is literally where Kyubei puts a puella magi’s (magical girl’s) “soul”. Kyubei’s logic behind removing the soul out of his puella magi’s body is that they would be more effective fighters. The puella magi benefit from this by having their pain dulled and lethal injuries healable by magic. As the survival of their souls are no longer based on the condition of their bodies rather the condition of their gems. But the drawback from having a puella magi’s soul in a medium “gem” is that once the soul gem is placed out of range of a puella magi’s body. It effectively renders the puella magi dead, but puella magi can be revived by placing the soul gem back into range of her body, which is approximately a 100 meter radius. In addition the soul gem becomes a puella magi’s weak spot as it can be destroyed off the puella magi body, instantly killing them. Soul gems are also the origin of grief seeds. Once a puella magi falls into despair they become a witch and their soul gem becomes their grief seed. Also Kyubei can direcly inflict pain onto the puella magi by touching their soul gem such as the sensation of a spear piecing their stomach. Kyubei does not inflict such pain under sadistic intentions. But rather as an example why he believes the soul gem is a good idea to remove the hindering effects of pain in battle.

In the series Sakaya Miki is the only character to be temporary killed by having her soul gem moved out of range, hurt by Kyubei’s manipulation of her soul gem, and soul gem to become a grief seed. But through Sayaka, the other girls learned about the dark secrets of their soul gems. The other puella magi did not like Kyubei’s logic and feel like they are already dead and Kyouko dubbed themselves “zombies”. But having their souls inside a medium such as their gem makes a puella magi closely related to a “lich” as their soul gem acts like their phylactery.

The soul gem in reality is literally where the Kyubei extracted the puella magi's(magical girl's) "soul". to Kyubei, this was a logical decision to aid in the effectiveness of his puella magi. Once the puella magi's soul was placed into a medium "gem", the girls would be less affect by pain and major injuries can be healed by magic. Effectively making a puella magi into a lich with her soul gem being her phylactery. Kyubei can also inflict pain directly into a puella magi by touching the soul gem such as the sensation of being stabbed by a spear. As a draw back, if the soul gem is displaced from the puella magi about 100 meters away or greater. It would render the owner of the soul gem essentially dead. But can be revived if the soul gem is placed back within the puella magi's range. The Soul gem is also the original source for grief seeds. Once a puella magi has fallen into despair, the soul gem will turn into a grief seed and the puella magi into a witch.  
In the series Miki Sayaka is the only  seen puella magi to have her soul gem placed out of range, had Kyubei directly inflict pain upon and turned into a grief seed. But through Sayaka Miki the other girls learn of the dark secrets of the soul gem. Also the girls did not take a liking to the concept of having their souls removed and dubbed themselves "zombies".