I prefer a setting where magic is lower-key, but still available.
My perfect-for-me setting is, frankly, that which I've been working on for several years in various forms (considering I'm more interested in a story world than a D&D add-on).
It has the realism that, since magic is all over the place, people will use it for practical things, but since magic is still damnably hard to get ahold of (Most of the stronger magical methods are held by beings that charge -heavily- for it, partially because the best of them stay immortal by buying the outragously expensive life-extending venom of the "Serpent of Longevity"). Magic even has a somewhat sci-fi explanation, in that it's essentially a waveform/semi-particle, which reacts to mental vibrations, and also leads to the multiple dimensions, where differing physical laws allow such things that are more or less fiends and celestials, so on and so forth. The fantastic creatures and races all have explanations, or such a thing is easily postulated.
It's a strongly fantastic world, where you may, in fact, run in to an elementalist using their powers to bake bread, but they're going to be there because they couldn't afford the full training of the mistress of that art, and beause more powerful effects are hard to come by. They can definately hold their own against a similarly experienced warrior, of course, since the same power used to bake bread can bake skin, armor, weapons, and eyeballs just as easily. Things like Fireball, however, are going to get the same reaction as someone letting off a car bomb when they've only seen firecrackers before. It certainly isn't Shadowdale.
However, since magic isn't nearly as easy to shove in to objects as it is in D&D (where it's mostly a matter of having oodles of gold and a few connections), you don't get places like Eberron either.
It's not exactly a 'gritty' world, though I do intend to have some grit in my actual stories. Heck, it has fancy-schmancy locations like the great libraries; I've got one smack in the middle of a lush jungle guarded by sphinxes, tabaxi-ish things, and a few humans and half-sphinxes (Basically a humanoid, medium-sized sphinx).
Now, I think that such is a fairly viable campaign setting, but it's a definate direction away from typical D&D, and there's certainly no chance of something as massive as the Lightning Rail ever occuring, nor will there be a bunch of places to do a power up tour on ala Planar Handbook, or tripping over wizard enclaves every week ala FR.
