If you're running a dragon-based campaign, the Draconomicon was an ideal book for the DM. Then along came Races of the Dragon, which gave Kobold-lovers something to work with, but offered little else interesting to the casual player. Dragon Magic makes up for what RotD failed to bring to the table. As with many new books released, this one doesn't require other sourcebooks, but certainly makes use of them. It is expected from a dragon-related book, but as a warning, this book is very Sorcerer-intensive.
The layout is straightforward, beginning with a few new sub-races. All of the major races as well as drow, hobgoblins, and lizardfolk get matched up with a different dragon type based on similarities, such as Gnomes and Copper Dragons both being notorious tricksters. These make for some interesting combinations, though nothing stands out as being a cut above the rest. As in the Player's Handbook II, alternate class features are offered to most of the major base classes (including the Favored Soul, Hexblade, and Dragon Shaman). The feats are cut and dry, most based on specific draconic lineage. A PC could easily drop one or two feat choices in here to gain some minor draconic power without sacrificing their chosen path, as seems to be the emphasis of the book. The draconic deities now have respective Initiate feats for their clerics and paladins.
Whereas the Warlock draws its power from a demonic background, the new class, Dragonfire Adept, draws its power from draconic heritage. Instead of an Eldritch Blast, they have a Breath Weapon that can be altered similar to the Warlock's blast. The Dragonfire Adept gains Invocations in much the same way as the Warlock, although ending with a slightly smaller number (this is made up for by the fact that Breath shaping/affecting is automatically gained through level progression, whereas these were Invocation options for the Warlock). The Prestige Classes simply require a dragonblood subtype for the most part and are fairly accessible. As per usual, you can expect at least one PrC to be offered primarily to Psions, one to Monks, and one to Undead turners.
There's about 40 new spells available, a handful of psionic powers, breath effects (the equivalent of eldritch essences), draconic auras (compatible with the Marshal's auras), draconic invocations, and warlock invocations. Much to my surprise, Magic of Incarnum, Tome of Magic, and Weapons of Legacy get some time to shine. Meldshapers with the dragonblood subtype have access to a few new soulmelds, and Binders have a new vestige to call upon. At the end of the list of magical items, there is one piece of Legacy equipment, the Wyrmbane Helm. Look for about a dozen new beasts to add to your menagerie. One new feature available is the Draconic Pact, which allows you to give a spell slot (and some fitting treasure) to a willing dragon (who gains that spell slot). The dragon then gives you access to a number of spell-like abilities based on the level of the spell slot exchanged and related to the dragon's type. It's a nice new concept and provides another good alternative for spellcasters.
That is the bulk of the book. I honestly did not expect a great deal out of this text after the Races of the Dragon release, especially since I rarely use dragons of any sort in my campaigns. However, the goal of this book does not appear to be "here's new material for your dragon-heavy campaign," but rather "here are subtle ways dragons can be incorporated into any campaign without becoming a dragon-heavy campaign." I applaud the book for reaching out to so many other sources like Magic of Incarnum and Tome of Magic and Complete Arcane, but without access to these books, a small but hearty chunk of Dragon Magic is lost. It is the perfect compliment to the Draconomicon, and a great replacement for Races of the Dragon. If you like to play with dragons, pick this one up.