It may contain substances that help to shift our awareness, help us to astral travel, to have visions, to aid divination abilities when scrying or reading cards or stones etc. Within witchcraft, as with many other pagan paths, the incense is used to purify a sacred space or object, to represent the element of air or air and fire together. It is magickally charged for a spell so that when it is placed on the charcoal the magic is released to be breathed in, or carried on the four winds to reach its destination. It can also be used to represent an illness and represent a healing. As you can see it is a very useful ingredient in many pagan practices.
Witches are generally eclectic and draw on many aspects of paganism including shamanic practices.
Grind the resin in a mortar and pestle, leaving smallish chunks that will burn longer. Powdered resins tend to burn out very quickly and if you are casting a circle using the incense you want it to at least be still producing smoke by the time you have walked around the circle and arrived back at the altar. Some barks or wood such as Sandalwood can be very hard to grind - you may need to start them off before you grind the resin. Rose petals also unless very well dried can be hard to grind. Mugwort doesn't grind at all and needs to be cut up very small.