The point made in the end by the caller is quite obvious, to be honest, and I didn't see Stefan refuting it. He just mocked the caller and moved on. If one reads a book that portrays a world where magic exists and it's part of that world rules (or physics, let's say), they read about charachters that will accept magic as normal, because that is what is rational in that world. Denying magic in this hypothetical fictional world would be as mad as saying magic exists in the real world, because it would be against the very physics of that construct. So when characters accept magic as part of their lives in FICTIONAL worlds where it "does exist", that is not madness, it's just internal coherence.
That said, the reader knows (hopefully) that what they are reading is a fictional world portrayal, so the rules or anything that occurs within the book pages are not things that are occurring/occurred in the real world. They (reader) know how to differentiate between the work of fiction and the real world, therefore they are not mad. The writer knows that what they wrote is a product of their imagination. It's something that came from their minds and was put down on a piece of paper. So the writer is not mad. The reader understands primarily that all those things were generated by the mind of the writer and that they are taking place now in their mind (the mind of the reader), as their brain is decoding the words. Therefore it is not an attempt to, as Stefan put, make things that are impossible to happen in reality and can only happen in the mind (like magic) to occur in the real world. Not an attempt by the writer, nor by the reader. Not for a single moment anyone is trying to sell this idea. It's something that can only occur in the mind (again like magic) that de facto occurs only in the mind (of the writer, first, and of the reader later).
So I don't really understand why Stefan is so attached to this line of thought about magic being a pure representation of madness. That and the fact that all these fantasy authors are not trying to write magic as an allegory for madness (nor conscious or unconsciously). They are just trying to write some cool stuff. =D