The most excellent Uncle Figgy presents outlines on 7 types of possible magic in an RPG setting:

• Ritual Magic, done in ceremonies and usually by groups
• Sympathetic Magic, using elements similar to the effect you want to produce as components
• Contagious Magic, requiring a bit of the target object to produce an effect
• Alchemy, proto-chemistry mixed with mysticism
• Spellcasting, the standard wave your hands in the air game magic
• Intuitive Magic, the creation of effects from little more than force of will
• Inborn Magic, inherent powers particular to the individual

The limitations of information technology and the dynamics of selling games preclude the use of Intuitive and Inborn magic.  Intuitive magic is too random and too hard to simulate using formulae a computer can understand, and Inborn magic is too unfair to impose on a game full of subscribers who will be pissed if their account contains only magicians with terrible abilities, or no magicians at all.  Of the remaining five categories, only Alchemy and Spellcasting have been implemented into the traditional RPG model, because they are the easiest to implement:  you do this, and this happens, all the time.  But can the others be implemented in such a way as to enrich the game experience?  Possibly.  Of the remaining choices, though Ritual Magic remains the most promising for a smooth gaming experience.

Sympathetic Magic can be considered more of a magic system modifier than a system in itself.  However, it winds up being a modifier to material component requirements.  This can help out senseless reagent systems, but usually it turns out to be more trouble than it’s worth to try and get enough of the right kind of feather so you can cast your Winged Travel spell.  If used, use it sparingly so as not to bog down the magic system.

Contagious Magic is not really useful for a computer-based RPG.  You would need to implement countless new mechanisms for doing things like ripping some hair out of the giant’s head so you could curse him, stealing a used hankie from another player to put into your voodoo doll, etc.  However, it can be a useful black box for the developer when dealing with criminals.  Assume that once the criminal is imprisoned, a lock of his hair (or whatever) is taken.  If he is wanted again for a crime serious enough to merit the expense, the local law enforcement agency may employ the services of a "finder" who uses the cell sample to dowse for the criminal and help track him down.

Ritual magic brings to mind a ring of druids chanting for a few hours to make it rain.  It’s a little broader than this, actually, and one can include ideas like Ceremonial magic into the category.  From a real-time game perspective, it doesn’t seem very exciting to sit around and watch your avatar chant for a long time.  However, the possibility of ritual magic can add a new dimension to mass combat against NPC’s with ritual magicians.  "Wow these guys are tough today… holy crap, there’s a ring of priests back there behind them chanting!  Flank them!"  Ritual magic can also be used to expand the possibilities of noncombat activities, like consecration/desecration of specific sites, divination, or just making the crops grow better.

Using ritual magic to modify many "buffs" that currently exist as short casting time spells, you modify their use and the mechanics of player dynamics.  For example, a blessing that temporarily raises a character’s abilities by a small amount can require a ritual, instead of merely popping off a quick spell when you see the critter charging your way.  Blessing has to be premeditated.  In this way, a player ritual mage becomes immensely valuable to a group on a mission.  Ritual magic is also apropos for various support and preparation magics useful in battle.  Need a mist to limit sight range to cripple the enemy’s archer superiority?  Have someone call the Dragon’s Breath for you.  Need to stop critical bleeding long enough to get the guy to a medical specialist?  Ritual.  The long casting times of rituals are perfect for such effects, and is a perfect way to limit the personal power of mages in straight combat while exploring new avenues of ability.

It should be noted that item enchantment magics should also be performed as rituals, with significant investments of power in many cases.  However, in order to prevent unbalancing effects and economic problems, these enchantments should be (a) limited in power, and possibly further limited by the ability of the wielder, and (b) of limited duration.  No one should have to tell you what happens when you allow characters to manufacture permanently enchanted weapons without hindrance.