Magic in Historical Settings...

In the winter of 168/169, the Roman emperor Marcus Aurelius was engaged in large-scale warfare along the Empire's northern frontier, fighting several tribes in Czechia, including the Marcomanni and Quadi, and things were not going well at all...   

During this campaign, the XII Fulminata (Thundering Legion) was surrounded by the Quadi and very nearly forced to surrender because it had no water.  Fortunately, when disaster seemed inevitable, a heavy shower relieved the Romans.  Inevitably, given the period and politics involved, this "miracle" was seen as divine intervention, with several traditions surrounding it:

Initially, the event was attributed to an Egyptian sorcerer who successfully invoked the gods.  Alternately, the Christians asserted that devout legionaries had called down this badly needed rain via prayers to their own god in the manner of their faith.

Personally, we suspect coincidence and propaganda (the event was chronicled in a triumphal column), however, the whole affair underscores something important about historic fantasy and how magic and/or miracles might be presented in games... 

First, we have the world as it ACTUALLY WAS.  No working magic and many alleged miracles largely indistinguishable from coincidence; although hotly debated to this day.  This reinforces the historicity of a setting and emphasizes decision-making and role-playing over reliance on special powers and/or magical abilities.

The "rain miracle" was recorded on the
column of Marcus Aurelius, underscoring how magic and
miracles were understood and interwoven into
an otherwise mundane and "historical" world setting...

Alternately, we have the world as antiquity THOUGHT IT TO BE, complete with working magic and miracles.  Both must be reconciled in true historical fantasy.  This can be challenging because the extremes are generally at odds with each other and finding the right balance requires care, discretion, and research.

When developing historical games, regardless of system used, the following is good to keep in mind:

(1) Magic and/or miracles that are mostly indistinguishable from coincidence, but easily attributed to supernatural causes under the right circumstances, are desirable for obvious reasons.

(2) Where more obvious magic is present, it should be rare and otherwise correspond to what people actually thought about how magic worked and manifest itself.  This is where the research comes in, noting that big deviations can ruin things.

(3) It never hurts to emphasize the historical side of things, noting that while dramatic magical manifestations make for excellent fantasy, they deviate strongly from real events.

Remember, history can exist without functioning magic because it already did!  Proper historical fantasy, as opposed to mythological fantasy, draws much of its essence from the mundane tinged with enough of the supernatural (just enough) to give it atmosphere and not the other way around because, ultimately, it's the human element that really matters, and this absolutely transcends ALL genres!