The Starseed is an invention created by the Voidrunners after studying ancient technology discovered near the core of the Voidrunners' planet while exploring deep beneath the planet's crust. The Voidrunners of today are not completely sure what the Starseed is capable of, but it is theorized to be able to fold space time and by doing so collapse black holes. In addition, the Starseed is able to create a time-loop that can only be ended by deactivating it. The original intent of the Starseed was to create stars, hence its name.
The Starseed as well as all other Voidtech works by controlling controlling particles and antiparticles, that is particles that exist and don't exist at the same time, through quantum entanglement, allowing it to contain and utilize great amounts of energy.
The Voidrunners sent the Starseed into the Ultravoid when it came time to try and collapse it, and it was embedded into a chunk of ground floating in the cebter of the black hole, presumably above the black hole's core. The impact was rough caused a giant crater to fork around it, and several pieces of metal debris from it got scattered around inside the crater, though the majority of the object still remained intact, standing upright like a giant tower. The Starseed marks the center of the game's "overworld map" and is the second area Rei got to after the tiny landing site.
The Starseed has several conduits, referred to as Starseed conduits, installed in different regions of the Ultravoid, possibly near the C.Y.D. nodes or being the C.Y.D. nodes themselves, as C.Y.D. needs to come back onlin at each of these nodes before Rei can activate the Starseed. She does so by clearing the anomalies in the areas and then defeating the Remnant of the regions, which are then used as a power source, called "Starseed energy", feeding the machine and allowing it to be activated.
The ancient artifact that paved the way for the creation of the Starseed was first discovered by the Voidrunners buried deep in the core of their home planet. The Voidrunners do not fully understand who or what originally made it.
C.Y.D. recounts that Pyat believed the Starseed itself was a holy vessel sent to them by the divine, destined to save their people, which is interesting considering it was supposedly created by the Voidrunners themselves based on the ancient tecnology discovered under their planet's crust. It is possible that the parts and plans for the Starseed was what the Voidrunners discovered, though.