Traditionally, a fantasy RPG has two basic sets of abilities: physical and magical.
Usually, physical abilities are used by the big, dim-witted fighter. The fighter just needs a big sword or axe, preferably a heavy suit of armor, and he's ready to go. Point him in the direction of a monster and he'll hack and slash his way through pretty much anything you throw at him. Playing a fighter is easy: just hit the "attack" button until the enemy dies.
Magic is given over to frail, elderly wizards of high intelligence. Magic tends to be vastly superior to physical abilities, both in power and in the range of powers, but can only be used infrequently (limited number of spells per day, or restricted supply of mana) and usually take a lot more work to learn. These two aspects of gameplay are supposed to complement each other, because you need a magic-user to do anything interesting, and you need a fighter to keep him alive.
In a game where each player only controls a single avatar, this creates two basic types of characters: those that are boring to play, and those that cannot survive apart from those that are boring to play.
This is particularly undesirable in a massively multiplayer game, because unlike in small-scale RPG's where a group of adventurers pretty much go everywhere together, in an MMRPG people usually have to forge alliance with whoever happens to be in the area at the moment. Magic users need to find protectors who are willing to fight with them, but the physical fighters (being much less interesting to play) are hard to come by, and often prefer to fight by themselves so that they can earn more experience, because if the game-designers hadn't made them reasonably good at fighting solo, then even fewer people would play fighters.
When you really look at it, the system looks like it was designed to inflict the maximum torment on the player. Why would anyone create such a division?
Most likely, it originated from a completely different genre: fantasy books.
In most fantasy novels you read, you'll find that magic is a powerful art practiced only by a select few. Mages tend to keep their own company, and do not normally deal with others. Generally, you find mages in a position of power, such as the classic evil magician trying to take over the world. Mages usually seem to have a knack for avoiding a direct confrontation, but if they ever to get into a fight, most of the time they appear to be more than capable of defending themselves against any force up to and including the elite private army of a successful warlord.
RPG-designers probably wanted to create the same sort of feeling for mages, but quickly ran into an obvious problem: because players didn't have to be special or go through the long, hard training of a mage in order to play one, everyone would want to be one, and therefore any universe they could create must be quickly populated by powerful wizards, since there was simply no good reason to be anything else. Clearly, they needed to balance out the choices a bit.
The first thing they did was to try and make it as difficult as possible to acquire magical power, since that is the way the authors of books limited it. The problem with this method is that players do not (and should not) have to actually go through the trials of their avatars; they don't want to roleplay a young apprentice in magic school who spends all his time reading and doing chores for his master, they want to play someone who is already capable of going on an adventure.
The next thing they did was to limit the amount of magic a person could use. They reasoned that it was all right to give the person tremendous power as long as they could only rarely use it, because then the average amount of power over time would even out. This still left the problem that all their wizards were either winning the major battles before they could become interesting, or running out of spells to cast (and therefore becoming utterly helpless) before the battle ended.
At this point, clever mechanisms are usually implemented to make it harder for the magician to actually use his power. Spells will take a while to cast, and any stray enemy who annoys the caster interrupts the spell, forcing the mage to start over. Wizards are forced to rest between spells. Sorcerers are forced to hunt down new spell scrolls in bizarre places every few levels in order to cast a slightly more powerful spell with exactly the same effect as the one they learned last level.
None of it ever seems to work. Wizards become "nukers" who stand in the back row, hoping they won't be attacked, simply trading their defensive power so that they can inflict several times as much damage.
There are two fundamental problems with all these approaches: firstly, rarely does anyone try to make magic fundamentally different from its physical counterpart. Warriors use flaming swords, wizards use fireballs. Warriors use plate armor, wizards use a protect spell. Thieves hide, magicians cast invisibility. Athletes run fast, sorcerers teleport. In every almost every case, mages are doing essentially the same things as fighters, they are just doing it better but less often. Secondly, all these restrictions on magic-users' abilities amount to the same thing: taking an archetype that is simply too powerful and should not be in the fight at all, and trying to tie his hands to make it a fair fight.
In short, rather than giving the player two equal but different paradigms to choose between, they are presented with two versions of the same paradigm, only one of the versions is made stronger and then handicapped. By now, any resemblance to the wizards in some Tolkien novel has long been lost from sight.
In the end, the false dichotomy between physicalism and magic only serve to conceal the fact that most games really only have one dimension to them: the "attack" button. There might be a "physical attack" button and a "magical attack" button, but they really do the same thing.
When I started to create Magi, with this in mind, I set down a few rules to use as a guide:
The game must have more than one dimension, and the dimensions must truly be different.
Every dimension must be effectively independent and independently worthwhile. If you pick any dimension to use and take away everything else, the game must still be worth playing.
It must be possible for any single character to make use of more than one dimension of the game.
It must be possible to make use of any dimension without using any single other one.
The basic idea was that there should be several coexistent worlds, each related to the others but largely independent from them. A character who lacked the component part of one of the dimensions could not interact with that dimension of the world in any way -- no fighting, no talking, no being obstructed by barriers, unable even to see it. For example, a completely nonphysical being would be unable to see the physical world, unable to launch or be the recipient of physical attacks, and would be able to walk through physical barriers (e.g. stone walls).
However, a character who existed in one of the dimensions but who did not develop their abilities in that dimension (for example, a humanoid who devoted himself to the study of magic) would be vulnerable in that dimension, because he might encounter a physical but entirely nonmagical enemy, which would then be utterly immune to magic. Conversely, someone who devoted all their time to physical training who encountered a nonphysical enemy would be at a disadvantage. This would not necessarily mean that you could not adventure alone -- just that you would have to stay away from the areas where you would expect to see entities outside your area of expertise.
The idea isn't in quite such an absolute form anymore, but that's still the basic idea. It seemed simple enough.
The first thing to do was to get rid of "physical attack" and replace it with physics. This was the first dimension of the game, and I wasn't about to let it get boring. It includes all the obvious, traditional physical skills (melee, ranged combat, thief/stealth skills, tracking, etc.) the also-obvious-but-traditionally-left-out-of-computer-RPGs skills like horseback riding, climbing, swimming, and acrobatics, but also "intellectual" pursuits tied to the physical world: herbal healing, disguises, animal taming, craftsmanship, seduction, impersonation, gambling, perception, engineering, appraisal, navigation, etc. In short, it includes not only physical combat, but also all of the physical sciences, and several other things as well.
That's all in the first dimension of the game.
I decided I wanted to make sure that magic was something special and unusual, so I looked for other dimensions that could fill in the aesthetic gap people usually use magic for. I created raveling, which taps and manipulates the fundamental framework of the universe, channeling energy into new places, and forging and severing connections between various people and things.
Not satisfied with just this, I called into service two traditional forms of "alternative" magic, expanding them into full dimensions. Psionics apply mental energy to directly manipulate the world, and can battle mind-to-mind without the use of physical bodies. The performance of music to invoke magic-like effects was promoted to the formal science of psychology, the study of the interactions of the mind with the rest of the world. Psychologists can use music to alter mental states, and they can also build limited models of social interactions, which can be very useful in politics.
I added alchemy to manipulate the elements and metaphysics to commune with the spirits, dracology based on a sort of symbiosis with the dragons in the world, and necromancy to ensure that any characters needed for the plot didn't really die off (more on Death in the concepts overview).
Finally, I returned to magic and wizardry, the manipulation of the ether. Unlike the other dimensions, the advanced use of these skills dramatically enlarges the scale of influence, such that the masters use their powers not for or against people, but for or against nations. Obviously, such a discipline necessarily commands a central role in the storyline . . .
Now, at first glance it would appear that, after much complaining and circumnavigation, I have recreated exactly the same problem that we were trying to fix -- specifically, magic being too powerful. However, there are several reasons why this is not so.
Firstly, magic does not accomplish the same things that the other dimensions do -- generally speaking, you cannot use magic to deal with individuals, and you cannot use the other disciplines to deal with nations. The power of magic is therefore not directly comparable to the power of any of the other disciplines. In a war, one necromancer can do little, but a wizard can easily mean the difference between being an emperor or a vassal. In a duel, a magician is virtually powerless, but a physicist or alchemist wields tremendous power.
Secondly -- and far more importantly -- while it is commonplace to perform simple magic, access to powerful magic or wizardry is not generally available to players. Your chances of gaining substantial control over the ether are better than your chances of conquering the world, but not by a wide margin.
Finally, to the degree that you draw yourself into the ether, you expose yourself to serious and unremitting danger. It is very difficult to remain unnoticed when you intrude into the realm of magic, and a great many NPCs and ethereal beings will not be pleased to make your acquaintance.
It is no light thing being a magi . . .