Witchcraft is powered by the individual's psychic ability, and thus can be boosted in power if more than one individual joins in the spell. A Circle of Witches, all performing a spell in unison, can achieve powerful results proportionate to the number and power of the witches in the Circle. This power can easily rival typical spells accomplished by Sorcery.
When Morrolan went to Blackchapel and met the priestess Arra, he dedicated his life to the goddess Verra. In her service, Morrolan resolved to found a coven of witches in Blackchapel. Over the last century of the Interregnum, the circle of witches in Blackchapel grew to include hundreds of witches. This group aided the citizens of Blackchapel, and were well respected members of the community
Later, when Morrolan travelled into faerie with Lady Teldra and constructed the original Castle Black, he brought many of the members of the coven from Blackchapel to be a part of his new Circle of Witches.
Originally this group resided in the lower levels of Castle Black, and it was their spells (at least at first) that maintained the structure as it levitated almost a mile in the air.
Later, the circle apparently moved to occupy the east tower of Castle Black. While at first the circle was led by Arra, the duties have since passed to a woman named Surill.