[Emerald Cat]

Well, magic is a great inspiration for writing speculative fiction. "What would happen if people could bend reality?" can really be a good way to overcome writer's block. Readers also aren't expecting the writer to come up with an entire consistent alternative physics as is often the case in sci-fi. So it frees up the author's time for other things.

Magic is especially important for fantasy settings. Many fantasy settings take place in medieval settings. On our world, medieval medicine was horrible. Up until the discovery of germ theory, death by infection was a real possibility if you received an injury.

This is problematic for a GM/writer of a realistic medieval setting. Killing your characters over every injury will drive away your audience. But you also risk suspension of disbelief if your audience realizes that you will never injure or infect your characters. Notoriety of medieval medicine means that you will have to deal with this problem.

Healing magic is a convenient way to handle this problem without completely changing the genre of your work. After all, magic has been an accepted part of the fantasy genre since at least the Odyssey. And you can keep injuries dramatic by limiting the capabilities of healing magic. In fact, you almost need to do this to keep injuries dramatic.

Once you've introduced healing magic into your setting, it isn't much of a leap to add other branches of magic. Being able to draw upon the vast well of supernatural creatures and effects from folklore can save you a lot of brain storming. Which is why the fantasy kitchen sink is a trope. That, and having your characters face off a jet sized dragon is just cool!