The first line of the spell reads: "Choose one creature, object, or magical effect within range."
For sure. The next two sentences though "Any spell of 3rd level or lower on the target ends.
For each spell of 4th level or higher on the target, make
an ability check using your spellcasting ability. The
DC equals 10 + the spell’s level. On a successful check,
the spell ends."
...which is why there's confusion about it in my group.
The charm ability of the succubus or vampire a magical effect. Dispel magic targets magical effects. If the DM feels that the use of dispel magic will have an uncertain outcome, he or she can assign a DC and call for an ability check.
Choose one creature, object, or magical effect within range. Any spell of 3rd level or lower on the target ends. For each spell of 4th level or higher on the target. make an ability check using your spellcasting ability.
In a similar vein however I'm unsure if dispel magic should be capable of dispelling summoned creatures.
As DM, dispel magic does whatever I say it does and I say it does dispel the charm effects of a succubus or vampire.
The rules serve the DM, not the other way around.
For your table. The OP was asking about the confusion in the spell. The spell isn't confusing if one understands that the Dispel Magic spell only has the power to dispel spells. As per the reading of Dispel Magic, it does not have the ability to dispel magical effects unless those effects are created by a spell.
You want to expand that at your table (or if you want to say that Vampire Charm is a spell), great. Do so.
It does not dispel magical effects, just like it does not dispel creatures or objects. For all intents and purposes, a Wall of Fire is a magical effect with a spell on it (or a spell driving it, i.e. the Wall of Fire spell).
Then the better question would be: how does one dispell a non-spell magical effect?
My ruling, as DM, would give an equivalent-spell-level to supernatural effects. A harpy is a level 1 challenge, so I guess that would be equal to a level 1 spell.Then the better question would be: how does one dispell a non-spell magical effect?
In any case, the wording of dispel magic doesn't prohibit it working on any other magical effect.
So, Dispel Magic can dispel creatures and objects then?
The first sentence is only target selection (Choose one creature, object, or magical effect within range). That's all the first sentence is. The second sentence and third sentence indicates what the spell actually does. It dispels spells.
But it's fairly clear from the wording that the designers only wanted it to affect spells