Paladin is the highest known rank of ability a Mage can achieve, second only to the Magic King.
The next highest rank is Cardinal Class.
To achieve Paladin rank you must exceed or pass the Cardinal rank.
Master Biblia and Master Liber, said that if both of them, Paladin class mages, ever fight, it would endanger the world. But even when not having to face each others, both seems to take a hands-off approach and only act as guide. When Liese is almost killed by vampires and ask for his help, Master Biblia goes as far as saying he is not supposed to be interfering with matter of the world.
But the extent of the policy is unknown. Ayesha, probably the youngest among their rank, helped her friend Anastasia to seal Arata into the End of the World. Master Liber also involve herself with the Iscariot, although she herself might not directly take any action. Among other Paladin, there are those who continue their pursuit of magic and change themselves into demons, even taking part among ranks of True Demon King's Twelve Generals.
One example of a Paladin class technique is suppressing your own magic to zero and then unleashing it in an instant. (Source: Trinity Seven Chapter 15 the ENGLISH version).
According to explanation from Master Akasha to Arata in chapter 77
To begin with, "Paladin" is not simply a class to indicate strength alone. There's a bigger intention. We are called the "Arbiters of Heaven", but those Arbiters will choose the next generation in the turning point of the history. It can be said that "Paladin" are "God Candidates chosen by the Gods".