A magic item, staple of many an fRPG, is an object, magically enchanted in such a way that it generates a specific magical effect when used. Objects with no obvious powers of their own that are used to perform magic don't count and are instead referred to as ritual tools.
The effects in question can be virtually anything - some may grant an enhancement bonus to the user (either a one off upgrade or an ongoing buff whilst equipped), some may mimic a specific spell effect and others might have some other, pseudo technological effect - such as a flying carpet or some magical widget that transforms into a boat or a ladder or something on command. Magical weapons and armour are favourites … depending on the system, they may simply grant crude combat bonuses, may perform normally but have supernatural durability or may have weird and outlandish powers such as wreathing themselves in flames and talking to their wielder. Generally the effect will be generated without placing any demands on the user - the item operates from its own power reserves, which may or may not be self replacing. In some cases, the reserves may suffice for a continuous effect, in others there may be a limited number of uses per time period or overall before recharging (if recharging is possible, and whether automatic, situational or manual).
In most systems, a magical item should be something that can be replicated by a suitably competent magician (or at least one skilled in the school of artifice if that's a thing) - if it requires greater capabilities than a mortal can provide, it's usually an artifact and/or a relic (depending on its power source). Not, of course, that being replicable necessarily means that any two functionally identical items can necessarily be made the same way - that may be possible, or may not, depending on the laws of magic and the state of thaumatology in the setting. Mechanically "divine magic" may operate the same as "secular magic" or may be completely different when it comes to artifice.
Settings and systems will also vary as to the inputs required - in some, producing a magical item will permanently deplete the creator's own magical essence, in others specific "power components" will be required (or abstracted into a price in gold). Sometimes (especially for items that reproduce a specific spell effect) all that will be required will be repeatedly casting the same spell into the thing.
Speaking of which, the power supply for a magic item is likely to be a huge issue - the simplest probably store castings of a spell and spit them out when properly triggered, others may take care of all of the ritual and skill of a casting but expect the user to supply the power and some may merely assist with the casting. There are also those that can generate workings, but will require the user to recharge them from time to time (which may seem to be the same as expecting the user to supply the power from the get-go, but includes a time disconnect between the two acts). Self powered items are likely to be rare and hard to make, probably requiring something with a connection to the otherworld (such as a bound spirit) to drive them.
Operating a magic item may be a thing of button pushing - which has more than a whiff of magitek about it , may require a "command word" to work (a classic) or may require some level of magical talent to interact with. Or, like most magical swords, it may be "always on". Some items, especially those of a fetishistic nature, may need the user to either bond with them or bribe or dominate them into service before they will work.
Game and Story Use
- How common these things are and what they do will have a significant impact on the feel of the setting - mass produced, generic items with relatively low end powers will give a distinct dungeonpunk feel whereas a few items with significant powers will give a more mythic feel.
- Also, the nature of magic in the setting will have a powerful bearing on things. A mostly shamanistic setting will have a high (or exclusive) percentage of fetishes, and similar things are likely to occur in settings where magic is mostly about summoning and binding demons (as in the works of Moorcock). Functional magic and well developed thaumatology is likely to lead to industrialised artifice - or at least straightforward and systematised manufacturing methods (expect then a "magical patent office" and/or a significant trade in "magic blueprints"). Esoteric and chaotic magic is likely to mean having to make every item from scratch to a newly researched design - even if you've just made something functionally identical.
- Market price for magic items will also vary enormously - rare items may be effectively unsalable due to the inability of the market to raise capital, common items may have retail style pricing … in between may lie a minefield of extremely fluid markets, auction pricing and frequent deception.
- Also, given the tendency of many settings to spawn very specialised "dungeoneering" items, the size of the market for any surplus items may be very small if they are of limited utility in civilian life.