The magic in the, um, Magic is the combination of stereo cameras on the windshield and an adaptive suspension system. The cameras can scan a road's surface 50 feet ahead in real time while going 80mph to analyze the condition of the surface. It then passes on its measurement data of the road onto the suspension system which adjusts itself right as the car is driving over the uneven road. It supposedly prevents oscillating and reduces vibration. Smooth sailing. Or driving.
The system can recognizes 'obstacles' at 3mm or better so it gets pretty damn detailed. From the looks of the video (which is put out by Mercedes), there seems to be a legit difference when a car is equipped with the Magic Body Control and when it's not. Who knows what that's like in real life (only rich people will know). More here.