Plague is a third-level Death Magic spell that costs three spell points and afflicts all living non-Death creatures with a deadly disease that deals them damage every turn.
Sickness always cripples an army, unless that army is already dead.
The damage caused by Plague happens on the unit's turn, and is in the same amount as from a Poison spell from the same caster. Despite the similarities between this and Poison, this is not a 'mass poison' spell: creatures can suffer from both Poison and Plague at the same time. When the spell is cast, all creatures are targeted, friend and foe alike. Fortunately for the caster, Necropolis units are immune (even the living ones). Also, undead, elementals, and constructs are unaffected.
If afflicted with Plague, seek a healer. Plague can neither be dispelled nor exorcised, but a Heal, Mass Healing, or Divine Intervention spell will cure it. If these are unavailable to you, know that the Plague will end when the battle does, so redouble your efforts.
It takes a few turns for Plague to really sap a strong army, but this spell really shines during long battles. Quicksand and Mass Slow can go a long way to making Plague the deciding factor of your battles. Similarly, Plague is often devastating during a siege.