I am constantly amused by the amount of "fluff" answers found in threads like this. This question sees more action than a porn star, with about as much intelligence behind it. It reminds me of the obtuse thinking behind, "Are we artists".
So a few schools of thought:
First school - we don't do "real magic" as "real magic" is Peter Pan flying or actually having "REAL" super powers. Great...that was real magic for me when I was 5 yrs old. I have grown up since then, and see "real magic" as something different; however, I do understand that line of thinking.
Second school...or as I like to call it - Special Ed School of unThought - I think this topic gets so many answers because of the personalized view of "real magic" or even "Magic" defined. I once asked people to define magic as entry into a group - some of the best answers I got - What I use to pay my rent - A craft I like to share with people - but all the "fluff" answers made me want to barf. "It is like when we all feel childlike in a land of unicorns and butterflys" - give me a break - your words have no meaning.
Third school of thought - "Real magic" occurs when someone witnesses something that has no explanation. They fully understand the procedure (card was selected at random, lost in a deck, vanishes from deck, appears in their pocket), yet have no idea on the final outcome versus the initial situations. This has been mentioned above - and I personally believe is the concept of GOOD magic, or STRONG magic...however, "Real magic" - I don't know.
So these are the main thoughts that occur again and again with some outside the box thinking/variance.
Here is the thing - Real and Magic - are contridicting terms at any level, at least in our world. So, really - we are trying to defind an oxymoron - not that easy.
real
1. true.
2. existing or occurring as fact; actual rather than imaginary, ideal, or fictitious
3. being an actual thing; having objective existence; not imaginary
4. genuine; not counterfeit, artificial, or imitation; authentic
magic
1. the art of producing illusions as entertainment by the use of sleight of hand, deceptive devices, etc
So to rephrase - Truthfully being deceptive - you see the reason it is hard to define.
Anyhow - if I personally had to make our own "Magic edition" definiton - I would say some of the things that people above have said:
Real magic is when the spectator is given no outs, you have connected with them, and left magic something they think and talk about for years to come - leaving the idea of magic, better than you found it upon your initial meeting. Real magic inspires thought.
There...I left my fluff behind too. Cheers.