While holding this rod, you can use your reaction to absorb a spell that is targeting only you and not with an area of effect. The absorbed spell's effect is canceled, and the spell's energy--not the spell itself--is stored in the rod. The energy has the same level as the spell when it was cast. The rod can absorb and store up to 50 levels of energy over the course of its existence. Once the rod absorbs 50 levels of energy, it can't absorb more. If you are targeted by a spell that the rod can't store, the rod has no effect on that spell.
When you become attuned to the rod, you know how many levels of energy the rod has absorbed over the course of its existence, and how many levels of spell energy it currently has stored.
If you are a spellcaster holding the rod, you can convert energy stored in it into spell slots to cast spells you have prepared or know. You can create spell slots only of a level equal to or lower than your own spell slots, up to a maximum of 5th level. You use the stored levels in place of your slots, but otherwise cast the spell as normal. For example, you can use 3 levels stored in the rod as a 3rd-level spell slot.
A newly found rod has 1d10 levels of spell energy stored in it already. A rod that can no longer absorb spell energy and has no energy remaining becomes nonmagical.