This life-sized carving of a Tiny animal is crafted from dark, rough stone. It has a hardness of 8 and 20 hit points. A witch can use the stone familiar to store up to 500 levels of spells (cantrips count as 1/2 level for this purpose). A witch can use the stone familiar to teach her living familiar any spells stored in it, and vice versa. A witch who identifies a stone familiar immediately knows what spells are stored inside it. A stone familiar is never found as randomly generated treasure with spells already stored in it.
What does it mean to "store" 500 levels of spells"? Does it mean for example, that I can use it as a bank of 100 level 5 spell slots? I am just unfamiliar ( no pun intended, ... no wait, now yes pun intended :p ) with what spell storing means.
It is basically acting as a 500 page spell book that can be read by witch familiars.
It is a safety net so the witch does not lose all its spells should its familiar be slain.
It is easiest just to think of it as a spell book where you don't have to pay for the ink to write in it - as that is pretty much all it does.
Edit - Compare to Blessed Book. It is about half the price and has space for about half the spells, it also has about half the caster level.
So The Stone Familiar is basically half a blessed book, but for witches.
It is basically acting as a 500 page spell book that can be read by witch familiars.
It is a safety net so the witch does not lose all its spells should its familiar be slain.It is easiest just to think of it as a spell book where you don't have to pay for the ink to write in it - as that is pretty much all it does.
Edit - Compare to Blessed Book. It is about half the price and has space for about half the spells, it also has about half the caster level.
So The Stone Familiar is basically half a blessed book, but for witches.
Thanks for the answer! Very clear clarifies the ambiguity presented with the items wording. Thanks again.