CSA0713: [S] Enter player two.
The world is full of of supernatural phenomena. In fact, there are so many different kinds, it's hard to classify them, simply because there's so much overlap.
If you were to try to define "magic" (as opposed to power from the gods, or ghost activity, or just plain weird stuff happening), though, the definition would have to be something along the lines of "supernatural activity which is deliberately caused by an intelligent living being."
You know, sorcery and spells. The kind of thing witches do. Explosions and potions and whatnot. (Of course, by that definition, "fairy magic" also qualifies ...)
There's even a spell for turning yourself into a youkai of the magician species.
In the middle of the Magic Forest, there is a cottage that is, quite naturally, about the same size on the inside as it is on the outside. It has been inhabited continuously by a family of youkai-magicians for the better part of sixty years. Originally, it had only one inhabitant; but then the family expanded, first through marriage and then with children.
And you (speaking of which)?