It means something is not special anymore. New Year's Eve lost its magic this year, it felt as if nothing extraordinary happened. Or imagine a really good baseball player that suddenly started to play really bad, you'd say something like: He was really awesome but now he has lost his magic. Meaning that one thing that make him stand out and special.

It means to lose the specialness. To lose its original value. If you give an example it would be easier to explain.