I think the Magic depends on a what you as a parent teach your kids as they grow up and what they like to believe. Going to struggle a bit to explain in the right words...but I'll give it a shot: My 16yo DD lived in a Cinderella dress from age 2-5 and continued to love the Disney princesses. Eventually, they come to start thinking they are not real; just a person in a costume. This is where I step in to keep the "Magic" real. Great examples are Santa, Easter Bunny, Leprechauns, Tooth Fairy... etc. There is two that the world has done the best job at....but lets not get in to that topic here.
Once the oldest said "Santa is not real" we squash that with things like: Are you sure? How do you know? Presents still show up from Santa don't they? Maybe there is (or was) or isn't a jolly elf from the North Pole, same with Easter Bunny and Disney Characters - the true Magic is that they we believe the story, real or not, and that we have fun with it and partake in it. So maybe it is a Parent or other person that plays the role, the fact is, millions of people keep the Magic alive. Part is that the oldest do not spoil for the youngest, but also to help keep the magic alive in them so as they still want to partake in it then eventually some day have kids of their own and the magic lives on.
Just like going to a Magic show - it is tricks, smoke & mirrors and Illusions. Call it "Fake" if you want - we call it "Magic." While you believe it is not real or there is some explanation, just believe this is what "Magic" is.
Back to the Princesses...so now my oldest DD is 16yo and she has her two youngest sisters, 5yo and 4yo. She loved the princesses so much as a child, that she has great memories of them, and more than happy to pose with them for pictures at WDW. DD14 liked them as well, not as much, but sill has fun memories as a child and still happy to go get a picture with a princesses. Now we are waiting in those lines because of the 5yo and 4yo, but they oldest two DD's are right there with them, talking up the princesses and "when I was your age..." stories to them. While they may not be real, the fact is you can to to WDW, and see Cinderella and her castle, makes it "real."
...that make sense? Oh, and f you don't believe, you are a Fairy Killer! (sorry, couldn't resist)
Oldest DD and her Sister from 2014 visit (more in my TR link or
here):