Magic points, also referred to as magic powder, are magic energy pickups.
When wearing his Ancestral Tunic, Twinsen has a magic bar which they refill. They are consumed every time he uses the Magic Ball or spells (Protection Spell or Ring of Lightning).
Like all the common pickups, magic points can be obtained by checking some places (barrels, plants, etc.), dropped by dead enemies, or bought in shops.
In LBA and LBA2, Twinsen gets 10 magic points' worth of maximum magic energy for each level of magic he attains.