This is an entry in our Disneyland 101 Glossary: Disneyland Resort definitions in under 101 words, from Mouse Brief.
Magic Shots are enhancements to digital photos offered by PhotoPass photographers at Disneyland Park and Disney California Adventure Park. These enhancements are illustrated additions of Disney characters or other fun embellishments that might even make you appear to have magic powers. You can ask a PhotoPass photographer to do a MagicShot. If a photographer asks you to pose a certain way—like looking at your upturned palm—that photographer is probably setting-up a MagicShot. You can see the MagicShot additions in your personal photo gallery. You might have a longer with to view these than for other conventional photos.
What is the PhotoPass service? Find out here.