For those unfamiliar with the history involved, Joseph would place the seer stone in the bottom of a hat, which he would look into, dictating the words that would appear as "letters of fire" from its darkened surface (the phrase is from David Whitmer). Apparently Joseph was quite familiar with the use of seer stones even before he began the translation, and there are stories of him using such seer stones to, for example, literally find a needle in a haystack (with his face in a hat and everything!). It's also important to note that Joseph discovered the above seer stone in a kettle in the bottom of a well, with the aid of yet another seer stone.
Now, the general reader might find such knowledge a bit unsettling, especially if they're a faithful Mormon and haven't heard much of seer stones before. After all, it is a bit weird. But as far as weirdness goes, we Mormons are no strangers to it: from golden plates to Kolob to polygamy, odd beliefs are really our bread and butter. Still, I think it's necessary for me to give my perspective on the strangeness of hats and seer stones, so that I can perhaps help the reader integrate it into their already-existing belief system.
The real questions on everyone's minds are a) Why or how did Joseph Smith use this ordinary-looking rock to translate scripture? and b) What's the deal with the hat? In answer to both of them, I'm going to draw on some insights from a book by Jungian psychologist Marie-Louise Von Franz, titled On Divination and Synchronicity: The Psychology of Meaningful Chance. Here's a picture of the cover:
This book, which I read sometime last autumn, makes an interesting claim about divination (think of fortune telling, palm reading, crystal gazing, etc.). The author writes that:
"Almost all non-number techniques [of divination] are based on some kind of chaotic pattern, which actually is exactly like the Rorschach test. One stares at a chaotic pattern and then gets a fantasy, and the complete disorder in the pattern confuses the conscious mind....Absolute knowledge is like candlelight, and if the electric light of ego consciousness is burning, then one cannot see the candlelight. If one looks at a chaotic pattern, one gets befuddled, one cannot make head nor tail of it. If one looks for a moment at a Rorschach card with its accumulation of dots, that blots out the function of the conscious mind, and then an unconscious fantasy comes up--"Oh, that looks like an elephant," or something like that. So one can get information from the unconscious by looking at a pattern."
Whether it be tea leaves, a crystal ball, or even palm lines, there is nothing inherently "special" about the tool the diviner uses to discern hidden or unknown things--they're just random enough that the bright light of ego-consciousness can dim itself, enough to let normally unconscious intuitions come to the surface. I myself have experienced this; when I would meditate in front of a plywood wall, I found myself making out figures in chaotic swirls in the wood, much like how one looks at the shapes of clouds. If I felt at all lustful, I would make out figures that looked like alluringly posed women. If I felt upset or despairing, I would see grotesque insects or monsters in the wood. Moreover, if I was in a very spiritual place, I would occasionally make out the figure of a bearded old man (reference the "Wise Old Man" archetype of Jungian psychology). From my perspective, what went on when I discerned these figures in the plywood was that unconscious tendencies, patterns, or even figures "embodied" themselves with whatever was at hand. It's kind of like how a person looks more beautiful if you love them, or how if you look for bad things, you're only going to find bad things. Remember, "like unto like."
In reference to Joseph Smith's translation process, I'm proposing that he used the stone and put it into a hat to let the unconscious light of his spiritual intimations and intuitions more easily come to the surface. In the darkness of the hat's bottom, I find it likely that he saw things that--though they technically were before his mind all the time--he could only see if the "electric light" of daylight consciousness was dimmed, so that the "candlelight" (spiritual light?) of intuitive spiritual perception could manifest itself.
This would certainly explain why the seer stone eventually became unnecessary. When Joseph translated the Books of Moses and Abraham without the aid of a "seeric device," it follows from what we have been saying that his spiritual perception became attuned enough that he no longer needed the aid of something dark or chaotic to dim his waking consciousness. He could do it at will, something Rudolf Steiner thought was absolutely possible (see this post on the subject from a few days ago).
Another reason to believe in this interpretation of the translating process is that, as David Whitmer pointed out, "He [Joseph] could not translate unless he was humble and possessed the right feelings towards every one." The book by Von Franz talks about this too: she writes that "If divining fails, one can generally see that the diviner has a personal neurotic problem which he projects into the material." In other words, if Joseph felt annoyance or any kind of ill feeling, those emotions would block out the clarity of thought he needed to discern the dim light of the spiritual impressions that he translated into the Book of Mormon. This will resonate with anyone who tries to receive personal revelation while leaving a conflict or a sin unsolved--unless you repent, that sin will stand in the way of the spiritual light you're trying to receive, making it that much harder to learn from it.
Practically speaking, this interpretation sheds an entirely new light on Adam S. Miller's idea that the Book of Mormon is "your own personal seer stone." When we read scripture, we are doing more or less the same thing that Joseph did when using his seer stone: letting the glaring light of our egoistic pride and our selfish will subside, so as to discern the soft light shining subtly through the pages and the words. As such, scripture study (or prayer, or any kind of method to obtain personal revelation) becomes much more powerful when you're tired. In the twilight region between wakefulness and sleep, something spiritually amazing happens; insights leap out at you, and everything suddenly becomes a vessel for divine light. Something to ponder, at least.
In any case, don't let the weirdness of things like seer stones put you off of the Church's claims. One thing I've learned is that the best parts of life are weird. Weirdness is refreshing when compared with how boring normality can be.