Essentially magic is the first step into higher tier content. And from my experiences with server chat and forum discussions it seems to still be quite a confusing subject for some, which is fair as some of the mechanics are really hard to figure out.

So without further ado let's begin the guide.

The Basic Resources

To start off I will list some of the basic resources you are going to need for magic content.

Magic Fiber - This resource can be picked up from grass tufts on the ground in the magic Biome.
Magic Berries - This resource can be picked up from bushes on the ground in the magic Biome.
Mageweave Bark - This resource can be gained by chopping down trees in the magic Biome.
Magic Wood - This resource can be gained by chopping down trees in the magic Biome.
Magic Core - This resources is obtained by killing creatures in the magic Biome.

These resources are all relatively easy to collect. They also are the main resources for most of the crafting recipes linked to magic.

Magic Stones

Magic stones are harder to find and are pretty much the hardest and most vital resource for magic.
These stones can be found underground, in ruin chests, gem Spider corpses and obtained through killing other magical creatures like Soul Reapers and Dragons. The names of the stones are the following:

Topaz
Emerald
Ruby
Sapphire
Amethyst
Light jade
Black Agate (Thanks to the User "Fruit Punch" for the valuable information!)

You might have come across these gems while mining or exploring caves and wondered why you can't collect them with your pickaxe or drill. This is because they have to be collected with a wand. I know, it's very confusing and honestly I don't know why we can't just use our tools on them.

Once you collect these gems you will notice that their names get changed to suit the elements:

Topaz - Earth stone
Emerald - Wind stone
Ruby - Fire stone
Sapphire - Water stone
Amethyst - Thunder stone
Light Jade - Light Stone
Black Agate- Dark stone

These stones are going to be the most important part of magic crafting.
You will need them in all sorts of recipes to craft utility items and staves.

Now that we know about the basic resources it's time to use them to our advantage in combat.
At the magic workbench you can craft a staff. Once you have it in your toolbar you will realize it requires ammo. This ammo is the stones we talked about earlier. However you have to turn them into dust. This can be done at one of the specialized workbenches for magic.

Once you've turned the stones into dust you can use them as different ammo types. They can be switched out similar to how switching arrow types and ammo types work. Just drag the essence into the staff and it will use that until it runs out. All the elements have different projectiles however I am not sure if they in anyway debuff or do more damage to certain types of enemies.

Essence (Windstone)

Once you reach the level to craft a Grand-master Staff you will notice that every single essence you load into it will have a separate effect:

Wind Essence: Shoot a green tornado which pushes back enemies and can stunlock them in corners.
Earth Essence: Shoot a boulder which on impact creates massive spikes that erupt from the earth dealing heavy AoE attack damage.
Fire Essence: Shoot a bolt of flames which explode on impact dealing massive damage and setting the target and surroundings on fire.
Thunder Essence: A lightning bolt hurls down from the sky dealing mediocre damage and doing a small bit of AoE damage.
Water Essence: Shoot a bolt of Icy Water which deals a small Pool of AoE damage and slows all hit targets.
Light Essence: Create a large rune which hovers above the player character showering down light spheres dealing AoE damage.
Shadow Essence: Create a large Shadow cloud dealing damage on impact, poisoning and blinding the target.

!!WARNING!!
This staff does heavy self damage so make sure you have the range for the attacks

Taming magic creatures requires magic sleepy arrows. These can be crafted using the following resources:

1 x Stone Arrow
1 x Magic Berry
1 x Mageweave Bark
1 x Wind Magic Stone

These arrows can be fired from arrow turrets, the bow and crossbow.
Make sure you scan creatures to find out if they are considered magical because if you shoot normal sleepy arrows you will damage the creature and eventually kill them.

Magic Sleepy Arrow:

As soon as you can craft magic sleepy arrows go out there and farm around 20 of them and trap a specter wolf. Proceed to shoot it with the sleepy arrows and feed it meat once it's unconscious.
Once tamed you are able to ride it without needing a saddle. This wolf is an absolute monster when it comes to dealing with early game creatures and allows you to ride a powerful creature without any real level restrictions besides the level needed to craft magic sleepy arrows.

Don't forget to rate the guide if you liked it and favourite it so you can refer to it during your gameplay.

I will do my best to make the guide more in depth as long as the game progresses it's development and more features are discoverd and become clear.

For now I hope you enjoyed my guide and found it useful.