Why doesn't this Key down function work?

Your variable magic is it a boolvalue? If it is then magic.value == false/true

If local Magic or MagicEquiped is a boolean value, then this should fix it:

wait (1)
local player = game.Players.LocalPlayer
local mouse = player:GetMouse()
local Magic = player:WaitForChild('MagicEquiped')
local playername = player.Name

mouse.KeyDown:connect(function (key)
    if string.lower(key) == "q" then
        if Magic.Value == true then
        Magic.Value = false
-- Statement(s)
        elseif Magic.Value == false then
        Magic.Value = true
-- Statement(s)
        end
    end
end)

The function was meant to find the Value of the "Magic" boolean, but instead your script was coded in a way that tries to adjust its existence.

If you do want to do in the Magic = true style (without .Value, and therefore, without needing the Boolean Value), you can make a boolean value within your script.

wait (1)
local player = game.Players.LocalPlayer
local mouse = player:GetMouse()
local playername = player.Name
local Magic = true

mouse.KeyDown:connect(function (key)
    if string.lower(key) == "q" then
        if Magic == true then
        Magic = false
-- Statement(s)
        elseif Magic == false then
        Magic = true
-- Statement(s)
        end
    end
end)

^^If other scripts are using MagicEquiped, then don't use this code. xD The Magic boolean in-script value is specifically for that script and that script only.

Just in case if the script can't find the player, then this is one of the good replacements for wait(1):

repeat wait() until game.Players.LocalPlayer ~= nil

EDIT

repeat wait() until game.Players.LocalPlayer ~= nil
repeat wait() until game.Players.LocalPlayer.MagicEquiped ~= nil
local player = game.Players.LocalPlayer
local mouse = player:GetMouse()
local Magic = player.MagicEquiped
local playername = player.Name

mouse.KeyDown:connect(function (key)
    if string.lower(key) == "q" then
        if Magic.Value == true then
            Magic.Value = false
-- Statement(s)
        elseif Magic.Value == false then
            Magic.Value = true
-- Statement(s)
        end
    end
end)

The script will now wait until your player renders. Then it will wait until the bool value is rendered.

Heyyo,

In order for you code to work "Magic" must be a BoolValue, which I assume it is... Also, you should be checking for Magic's Value property instead of Magic itself.

mouse.KeyDown:connect(function(key) 
        if string.lower(key) == "q" then
            if Magic.Value == true then
                Magic.Value = false
            elseif Magic.Value == false then
                Magic.Value = true
            end
        end
    end)
    

or, much simpler..

mouse.KeyDown:connect(function(key)
        if string.lower(key) == "q" then
        Magic.Value=not Magic.Value
        end;
    end);