Lembas may seem like magic to us, but the elves would have seen it as simply natural.
Clarke's Third Law is
Any sufficiently advanced technology is indistinguishable from magic.
Arthur C. Clarke Hazards of Prophecy: The Failure of Imagination
Elves don't use "technology" the way we do, but they use their advanced understanding of the natural world to create things that seem impossible (and therefore "magical") to us.
While staying in Lothlórien (where the Fellowship is given a supply of lembas), Sam has a conversation with Frodo and says:
'It’s wonderfully quiet here. Nothing seems to be going on, and nobody seems to want it to. If there’s any magic about, it’s right down deep, where I can’t lay my hands on it, in a manner of speaking.'
‘You can see and feel it everywhere,’ said Frodo.
‘Well,’ said Sam, ‘you can’t see nobody working it. No fireworks like poor old Gandalf used to show. I wonder we don’t see nothing of the Lord and Lady in all these days. I fancy now that she could do some wonderful things, if she had a mind. I’d dearly love to see some Elf-magic, Mr. Frodo!’
The Fellowship of the Ring: The Mirror of Galadriel
Galadriel joins them and takes them to a garden on the slopes of Caras Galadhon to show them the Mirror of Galdriel. When Frodo is unsure about looking in it Galadriel says:
‘And you?’ she said, turning to Sam. ‘For this is what your folk would call magic, I believe; though I do not understand clearly what they mean; and they seem to use the same word of the deceits of the Enemy. But this, if you will, is the magic of Galadriel. Did you not say that you wished to see Elf-magic?’
The Fellowship of the Ring: The Mirror of Galadriel
It seems to me that the elves (or at least Galadriel) understand that we view their more advanced creations (lembas, the Mirror of Galadriel) as "magic", but do not consider them in that light themselves.
