A spell pouch holds a certain number of casts, based on size. Not just the slots of spell. In addition, if you put multiple types of spells into the pouches, they'll all cast simultaneously. This increases your DPS and your XP/Hour and also allows you to take on higher level monsters without being killed before running away.
Each pouch can hold 1,000 casts of a spell per number of slots it has. Thus a Medium Magic Pouch with 2 slots can hold 2000 casts of Earth Missile and 2000 casts of Fire Missile, both spells will fire simultaneously, adding as much as 16 damage per combat round.