Of course those in the knights use their spells to aid the knights in combat and to heal their wounds. They're an invaluable resource.
Those who choose not to assist the knights directly still have access to all the Empire's resources and the world's finest research facility. The mages who live there work to find new sources of energy, and to use magic to manipulate the world. For instance, mages are responsible for much of the research that enabled us to use blastia, ancient devices that provided light or water or heat. [even though blastia turned out to be kind of bad]