Legendary author Ursula Le Guin published a roundup of new or recent fantasy books she's read over at Bookview Cafe, and her thoughts on Jo Walton's Nebula-winning novel Among Others are especially worth reading. In particular, she talks about what she likes about the way Walton depicts magic:
Magic in Walton's novel functions magically, yet can always be seen and explained as nothing unusual. Fairy? what fairy? that was a rabbit. The spell didn't change reality, reality's always just been the way the spell made it be…. This is a large, interesting idea, well worked out. Walton's trying hard to do what I call moving the boundary: to redraw the border of Elfland, to alter, or make more permeable, the wall beween the possible and the impossible. I think she almost succeeds. I don't think anyone can, in fact, succeed. But it's a gallant and fascinating enterprise.
If the sf readers who dismiss fictional magic as soft-brained wish-fulfilment will look at what Walton's doing at that boundary line, they'll see a harder, more honest intelligence at work than in the kind of "hard" sf that uses the terminology of scientific theory or speculation magically.