Magic is, to me, a word used to explain things we don't understand. The opposite of magic is science, a discipline which tries to explain precisely why things are the way they are. Think of a shaman trying to make the magic of rain appear, when we know exactly how rain happens. Is the rain the result of magic, or of science? Once you know the facts, it's hard to believe in magic as the answer.
But, as much as I believe in science, I don't think it will ever explain everything. Will it ever be able to dissect love? We now know why stars twinkle, but can a scientist tell me why we still find stars in the sky beautiful? Why do humans laugh?
All writers perform magic when they bring characters who aren't real to life in the reader's mind. The more you bring them to life, the greater the magic. Is the magic of creating The Wizard of Oz greater than the magic of writing the weather report? I think it is, though both documents are written.
Though I do write contemporaries (love is magic, right?), I also love to write futuristics and fairy tales in which I strive to combine both magic and science. So I have things in my stories that might seem magical today, but they have to be grounded enough in science that they may be real one day in the future.
For example, in The Star Necklace, I use the science of invisibility (bending light around a fixed object) to give my H/h a way to be invisible when they want privacy in a crowded area. Though it seems magical to the heroine, it is possible, based on scientific principles.
It's been said that readers will allow the author one leap of faith into what may be considered magic (for example, that humans can shapeshift). But after that, everything must have a rational basis. A man can turn into a wolf, but he then must behave like wolves do.
There are many forms of illusion besides the written word. There's music, dance, theater and art, all disciplines that can draw out ideas and emotions that aren't concretely expressed.
What is your favorite form of magic?