"The spell is cast on an area of the Dungeon and the spell then heals all the creatures within a certain radius. This range can be increased by holding down the left mouse button while casting, although it costs more."
— Dungeon Keeper Gold Manual
That description is outdated; it only heals within a certain radius on certain Dungeon Keeper prototype versions. In the final, released game, it only heals a single creature (and it is cast on the target creature, not an area of the dungeon) and the more gold spent, the more health is restored. The amount of health restored is between 80 and 500 points.
"Use this spell to grant new health and vitality to battered troops. Cast this on a particular creature to replenish their Health. Healing ailing creatures can change the odds dramatically in small skirmishes."
— Dungeon Keeper 2 Manual
The standard version heals 1,600 health. The upgraded version heals 2,500. Like its Dungeon Keeper counterpart, it's cast on the target creature.