Let's Make Some Magic (part I)

The presence of magic in your world is one of the classic symptoms of the Fantasy genre.  It is specifically this element which is the primary divider between Fantasy and Science Fiction.  Some argue that this feature makes the genre of Fantasy childish and escapist.  I will argue that we experience magic every day and that those who disparage the genre are narrow-minded and dull, so nyeh.  The "magic system" that a Fantasy author employs is often the feature of their world that defines it for their readers.  

    Magic can take many shapes in a fictional setting.  Gods can be viewed as magical creatures with powers beyond our understanding.  Similarly, any creature of the fey or the spirit realm could be viewed as magical and possessed of a variety of powers humans do not have.  Perhaps humans can manipulate some unseen force and give it shape.  In a Medieval setting, many things may seem like magic that we know simply to be unusual natural occurrences ("I will block out the sun!" and so on).  How it expresses itself in your world is without limit.
    In recent years, much attention has been focused on making the rules which govern magic in a given world coherent and believable.  I get the feeling that this desire goes back to the dawn of Role Playing Games where, to make a wizard playable, you had to be able to limit his spell use or he'd quickly dominate the game.  Since that time, magic has become generally less fantastical and more clinical.  In the first novels I remember reading, the words of the enchantment would leave the caster's mind once he performed the spell (having to re-memorize the spell to cast it again).  Not only did this make the wizard spend lots of time in study, but books had to be portaged about as well.  This is indeed characterful, but it's also a pain in the ass.  Ever since, authors have been trying to build a better mousetrap.
    Prevalence of magic is a significant issue when designing cultures.  A shaman, a seer or a witch might be present in every major community.  Perhaps these figures are legendary or may be consulted only after a harrowing journey (wizards are notoriously isolationist).  What do these figures require in return for their services?  If magic is everywhere, it will effect society in other ways, possibly stunting the sciences or providing new class divisions.  Is magic a talent everyone has in equal amount if only they know the tricks?  Are there related schools of study or philosophies?  It is important to explore these kinds of questions before you start writing if you want to maintain internal consistency.
    Creating a fully realized system of magic with graphs, algorithms and multifunctional syllogisms (no, I do not know what the last two really are) is not required when building a fantasy world.  However, it is important for the author to know how it all works.  Unless you want all-powerful sorcerers dominating your planet, you do need to build in some limitations.  Magical creatures that cannot be overcome would quickly dominate their environments (hence sunlight for vampires and silver for werewolves).  Minutia in a magic system is only important when we encounter it in our stories, but it's always better to have it thought out ahead to potentially drive a story instead of having to run from a systemic paradox of our own devising.