It looks like a regular stone well, and the top of it is made with straw.
Role in episode
When Mr. Krabs sees a child throwing a quarter, he tries to stop him. He tries to stop another man from throwing money down it as well. He hears that people throw money down a hole for fun, so he installs a wishing well.
SpongeBob loves the idea so much that he songs a song about it, but Squidward hates it. Regardless, Mr. Krabs puts SpongeBob at the bottom of the well and puts him on coin-collecting duty. After Sandy, Plankton, and Mrs. Puff have made their wishes, Patrick, mistakes the well for a trash can by throwing his soda cup in it. That night, Mr. Krabs arrives to collect the money and falsely tells the duo that if they believe hard enough and dig deep enough, all their wishes will come true.
SpongeBob and Patrick take this literally and begin to dig the well deeper. After digging, they claim to have "found the magic" from a golden crack on the ground. The duo forces Squidward to see it in an attempt to make him come down in the well with them. As Squidward tries to see the "magic," he falls into the well and is forced to deal with SpongeBob and Patrick's antics.
The next day, Mr. Krabs arrives to check on the well as Squidward finally climbs out, with SpongeBob and Patrick following.
Squidward wishes to get as far away from the well as possible, and is subsequently hit by and stuck to the front of a bus going to "far away." Mr. Krabs asks SpongeBob how much money they made, and SpongeBob explains that they made no money, but found the magic. Mr. Krabs then tries to explain to him that there is no such thing as magic, but then sees that the wishes of Sandy, Mrs. Puff, and Plankton have all come true. SpongeBob asks if the sights were proof enough but the skeptical Mr. Krabs still refuses to believe in magic, and tries to prove that magic does not exist by wishing to be "steamed and served with a side of melted butter." SpongeBob becomes worried for his boss before Mr. Krabs gloats and asks where magic is before he suddenly disappears.
Mr. Krabs' wish has been granted and he is turned into a real sea crab on a plate. He wonders where he is while the hand of a waiter places a cup of melted butter on the plate with him, and Mr. Krabs becomes concerned for his own safety. Then a live-action human puts on a bib prepares to eat Mr. Krabs in his meal as he realizes that magic is actually real and immediately regrets his wish afterward.
Sandy - Wishes for a fancy telescope that works underwater.
Plankton - Wishes to be big enough to crush his enemies like "the vermin they are."
Patrick - Wishes "SpongeBob was there to see this."
Mrs. Puff - Wishes for a new hot rod, so she could be a "hot roddin' mama."
SpongeBob - Wishes that Squidward could see the magic inside the well.
Squidward - Wishes to be as far away from Bikini Bottom as possible.
Mr. Krabs - Wishes that he was steamed and served with a side of melted butter in an attempt to prove that magic does not exist. He regrets his wish once he is proven wrong.
At first, none of the wishes are granted, but when SpongeBob digs up the magic at the bottom of the well, everyone's wishes end up being granted.