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The "three karmas" seen as the source of humanity's sins are Deed, Speech, and Intent.
The staff was once the possession of a corrupt monk who had succumbed to the temptation of the karmas and was tainted with evil energy.
It somehow ended up in the hands of Kong, who gave it to Xiba. Kong had been helping Xiba to supress the evil he had been born with via breathing techniques and other such methods. The rod was presumably a test to see if Xiba could handle it. Due to Xiba's upbringing, he became a sort of wild child among nature, eating and sleeping whenever he wanted to. Since Xiba ate and slept solely according to the natural physical demands of survival, he had no real understanding of the struggle of morality or 'good' and 'evil'.
Xiba was thus able to extinguish his own evil energy, as well as that of the Three Karmas.
- Its name is also based off the weapon of Sun Wukong, drawing furthermore references to him and Xiba.