"Ninja Magic" is a myth that rose out of the clever tricks of the ninja being used in the superstitious and ignorant era of feudal Japan.
From the samurai's point of view, ninja adversaries were able to transform into mist, summon man-eating wild animals to aid them, telepathically unlock doors, become invisible, hurl balls of fire, and remain completely unharmed after being sliced several times with a katana. From the ninja's (and reality's) point of view, however, the ninja was simply able to run like Hell after throwing a smoke bomb, sprinkle powdered animal blood or urine on an enemy to draw vicious animals toward him, unlock a locked door by reaching over the open roof around it with a pole or weapon, shed clothing while running to reveal an inner layer of clothing that matched their new surrounding, make ball-shaped bombs that could explode on impact when thrown, and wear dark clothing that would hide the appearance of blood when wounded. What is important, however, is that the stories that were recorded, retold, and publicized in feudal Japan were those of the samurai, not the secretive ninja. Therefore, the story that the public got wasn't the ninja's version where the ninja used inventive stealth techniques to fool his foe, but instead the samurai's version where a demon dressed as a ninja defeated several samurai warriors through the use of demonic supernatural powers. Thus, the myth of "Ninja Magic" was born.
Today, we live in an age of relative enlightenment, in which the secrets of the ninja have been revealed as a very clever use of science, ingenuity, and common sense. So why does the myth of Ninja Magic still persist in our fiction? Well, despite being fairly enlightened, many, many people in several countries around the world have taken to keeping their myths alive by including them in their fiction, either through movies, television shows, or video games. Because of this, we both know that Ninja Magic is a myth and use it to defeat baddies as Ryu Hayabusa in Ninja Gaiden at the same time.
Long live fun myths, as long as we know the truth behind them.