I have the gem and still don't get how this works, You get 4 stacks of capacitance and then it procs lightning?
Five stacks, but basically yes. Here is the uncategorized spell associated with this gem: Capacitance
Contrary to the tooltip, you cannot put this in a 504 2/2 upgraded t14 helmet. (Source)
This is one of the possible meta-gem rewards that players can choose from the continuation of the Wrathion legendary quest line in patch 5.2. (Source)
Pro tip: This is not the gem for spell DPS. Spell DPS should take Sinister Primal Diamond. The price of my misunderstanding was 5x Primal Diamond. Owww...