The orb is essentially a two-handed weapon as it cannot be used with a shield. If you are attacked while gazing into the orb, you will return to normal "avatar view".
The orb has 2 separate modes - aim mode and focus mode. Aim mode is the standard mode and allows you to control the camera freely giving it a "flowing" motion which is ideal for video making. Using the arrow keys in this mode will pan the camera. Focus mode allows you to point the camera at a specific spot on the ground. Using the arrow keys in this mode will move the focus point. The controls are shown below:
The Orb of oculus is also the only item besides the Ring of kinship that can be taken into Daemonheim.