Downplayed: Only a select few have special powers of any kind. Most people, animals, and plants are quite ordinary.
Nobody is bothering to teach or learn the skills needed to master magic or psychic power; Alice may have the requisite latent abilities, but what good are they to her if she doesn't ever use them or learn to use them?
Magic was often misused in the past because Humans Are Bastards; strict bans have been placed and enforced on its teaching or general use.
Dragons have been overhunted to extinction (for meat and leather, as well as to protect villages and virgins). Witches and wizards, meanwhile, have been assimilated into the general Muggle population, or became victims of genocide by said Muggles.
Tropestan is now populated by wizards and witches, castles are not an unusal sight, and people keep dragons as pets, when just a few decades ago, it was populated by mundane people living in mundane cities with mundane pets.
The magic isn't gone, the people that rely on it hide it to prevent persecution.
Few people even have magical powers anyway; they're inborn traits, perhaps tied to genetics.
Outside of the rigid, self-isolated, and Orwellian state of Tropestan, magic is quite commonplace. Tropestan's rulers prevent all contact between its citizens and outsiders, for fear the Tropestani might learn about magic's existence.