Josh. said:
A game called "Life". It's basically the real world as in everything realistic, as in people, locations and well everything. You can go to school, get a job, get married, have children and It'll be a second life only on PS3, PC and/or Xbox360. Sorry but not the Wii, The Wii won't really fit it since It'll probably have really good graphics and will be like 18+.
So a mixture or GTA and Sims3
This is the only instance in which I half-agree with Kobry.
It would have the same "frame" of a world that you described, in which there are real cities, people...laws still exist, government, etc.
The only major difference is that it would be a magical world, in which magic...exists. Magic f all kinds, magic able to be manipulated. Of course, this world would adjust itself to accommodate the existence of magic.