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One in a set of five, each paragon is used to activate the Paragon Platform, allowing special treasures to be uncovered once the portal related to the paragon is traversed.
Using a Wayshrine's portals (or going there on foot), travel to the Wayshrine of Resolution in the Forgotten Vale: it's to the north of the frozen lake (with the two dragons), which itself is west of the unfrozen lake and the Wayshrine of Learning.
Head directly east after teleporting - the quickest way is to gently hop down the cliff that the Wayshrine of Resolution stands on, across the river that fills the iced-over lake, and over the hill on the other side to find two waterfalls: one upper and one lower. Between the two is a flat area with a river. On the same side as the Dragonborn (the western bank) is the Paragon Platform, and on the opposite side is the Frost Giant that drops the Sapphire Paragon when defeated.
Incidentally, this Frost Giant is found on higher ground to the north of the one that drops the Amethyst Paragon - both are on eastern banks of two bodies of water.
When inserted into the Paragon Socket at the Paragon Platform, it opens a portal to a secret room inside the Inner Sanctum. This room contains Elven armor, three chests of leveled loot, and various gems.