Magic level is one of your skills.
The higher your magic level is, the higher the damage/healing caused by
spells or runes will be. Magic Level does not affect the damage caused by Rods and Wands.
The Tibian with the highest magic level is
Victeron at 104.
To raise your magic level you have to cast spells and use mana. There is a spell, called Magic Shield, that makes damage taken by monsters (or possibly players if you play on a PvP-server) not reduce your Hit Points, but your Mana. Mana that is used in this way doesn't count towards your magic level.
Update 8.2, you can also increase your magic level by wearing certain pieces of Equipment. There are also other ways to (temporarily) raise your magic level, such as using a Mastermind Potion or by eating a Fried Tropical Terrorbird.
vocations gain magic levels more quickly than others. Knights advance slowly, paladins a bit faster. Druids and sorcerers advance the fastest. That means they need to use less mana to get a certain magic level than Knights and Paladins.
Hint how to get better magic level. Try to avoid standing in a protection zone because your mana won't regenerate there.
Don't stand outside depot without carrying food.
Level up by using mana potions
Equipment that boosts magic level
The following items increase your magic level while wearing them.
Arm: 3 magic level +1
Hat of the Mad
Arm: 3 magic level +1
Arm: 4 magic level +1
Ghastly Dragon, Battlemaster Zunzu.
Arm: 3 magic level +2
Arm: 7 magic level +1
Arm: 8 magic level +1
Hellgorak, Nightstalker, Sea Serpent.
Arm: 9 magic level +1
Captain Jones, Lizard Dragon Priest, Nightmare Scion, Wyrm, Sea Serpent, Draken Spellweaver, Hellgorak.
Royal Scale Robe
Arm: 12 magic level +2
Spellscroll of Prophecies
Def: 12 magic level +3
Ferumbras, Ghazbaran, Gravelord Oshuran, Hellgorak.
Spellbook of Dark Mysteries
Def: 16 magic level +3
Spellbook of Enlightenment
Def: 18 magic level +1
Frost Dragon Hatchling, Mutated Rat.
Spellbook of Warding
Def: 22 magic level +1
Ghazbaran, Hellgorak, Massive Energy Elemental, Necromancer.
Spellbook of Mind Control
Def: 16 magic level +2
Ferumbras, Ghazbaran, Hellgorak, Infernalist, Yaga the Crone, Zarabustor, Serpent Spawn.
Spellbook of Lost Souls
Def: 20 magic level +2
Diblis The Fair, Ferumbras, Hellgorak, Ghazbaran.
Snake God's Wristguard
Def: 14 magic level +3
Draken Abomination, Draken Elite.
Arm: 5 magic level +2