Gandalf uses more conventional magic early in The Hobbit, but as his writing progresses into LotR and other tales, you see him using magic more as part of something's "essence" rather than as a power that can be wielded and controlled as some kind of natural force like the conventional idea of magic. This is something Jackson did not really port into his movies; his wizards and spellcasters all seem to be more like RPG spellcasters and IMO it cheapened it enough that I just didn't enjoy that change.I'm extremely interested in how they will handle Smaug. In Tolkein's world dragons are highly intelligent creatures who don't really ally to anyone. They are a bit 'voice of Saruman' as well in their ability to mislead and employ double-speak. Not to mention hypnotise people, although this last point is somewhat questionable given that Tolkein's idea of magic is....quite subtle and he rarely directly mentions the term or even gives much description of spells apart from a few Gandalf employs.
In actuality, Gandalf and Saurman were Maiar (lesser angels) and Sauron I think was a major Maiar, the right-hand of Morgoth who was a Valar (the highest level of supernatural being under Illuvatar = God, to whom Illuvatar handed off overseeing of the earth). The Balrogs were also Maiar -- just dark or fallen ones. Which is why Gandalf and Durin's Bane were so equally matched. But it wasn't really conventional magic they were wielding, even if they had that power; it was one force of being pitted against another force of being ... like pitting fire against water and the stronger nature will win. The same with the High Elves -- they burned brightly, as part of the eternal race, and had their own inner force/nature that could be pitted against others.
Anyway, Dragons are rather similar. They are a force with their own strength of will and essence that easily dominates over mortal creatures. it's possible that they might have originated as Maiar themselves and are that powerful on their own.