What is magic ?

Magic is anything that happens which is inexplicable by present knowledge and attributable to a sapent cause. Thus, a meteorite is only magical if we assume that it is chucked down by some god or demon (and only questionably so then, since supernatural beings are fairly explicable, if unpredictable). The slow mutation of alchemy into chemistry is an example of the dissolution of magic into solid working scientific principles. Thus, as repeatable experiments advance, magic retreats, but can never entirely disappear, because we can never know everything, and the sterile plateau of pure knowledge is not attractive to the great mass of humanity. Sufficiently advanced technology is not merely indistinguishable from magic, it is magic - capabilities unknown, fear the worst until you discover its limits (early practical experiment " how far can that dragon spit fire? Ah, yes, about that far. So about twice that at all times would seem a reasonable margin. And we won't have to pay the preist for Ugga's funeral)
The world we live in (those of us who haven't already moved to fantasy worlds) still contains a lot of magic, particularly early in the morning. Spiderwebs loaded with dewdrops create thousands of micorainbows, as I walk home after working all night. I'm convinced that, if I brought a teaspoon and dug beneath their ends, they'd be teeny pots of fairy gold, probably guarded by leprecohens.
Fantasy worlds have a smaller percentage of their population interested in understanding phenomena (and a larger one dedicated to surviving them), so more is magic, the pixies and elves haven't disappeared under the dreaming mounds, various more or less magic bogie men wander around, harvesting children who ignore the traditions, and wizards, black, white and varieties of other hues, work mighty spells by laws of similarity and contiguity, unworried by conservation of matter and momentum. It'll never catch on in Slough.
Magic is the word to contain the indescribable, to explain away the inexplicable.