While I have not sailed on the Costa Magica, I have been on the Costa Med. If memory serves me correctly, water was served (no charge - unless you wanted bottled water) and I had milk every morning with my breakfast - no charge.
There was a high percentage of European passengers onboard so there were many smokers, but there were still designated areas that were "no smoking" (theater and in the restaurants). Lounges had designated smoking sections.
The best way I can describe the Costa experience is: "A Carnival cruise with a European flavor".