I suppose that, for the purposes of the tale, some would say that there is a latent distinction such as once was called the distinction between magia and goeteia [this is defined in the O.E.D. as 'witchcraft or magic performed by the invocation and employment of evil spirits; necromancy'] Galadriel speaks of the 'deceits of the Enemy'. Well enough but magia could be, was, held good (per se), and goetia bad. Neither is, in this tale, good or bad (per se), but only by motive or purpose or use. Both sides use both, but with different motives. The supremely bad motive is (for this tale, since it specifically about it) domination of other 'free' wills. The Enemy's operation are by no means all goetic deceits, but 'magic' that produces real effects in the physical world. But his magia he uses to bulldoze both people and things, and his goeteia to terrify and subjugate. Their magia the Elves and Gandalf use (sparingly): a magia, producing real results (like fire in a wet faggot) for specific beneficent purposes. Their goetic effects are entirely artistic and not intended to deceive: they never deceive Elves (but may deceive or bewilder unaware Men) since the difference is to them as clear as the difference to us between fiction, painting, and sculpture, and 'life'.
Lot's of interesting stuff here. Sauron, of course, as a long history of "goetic effects" going back to the First Age and into manifestation as the Necromancer of Dol Guldur. It is worth noting that there are two occasions where arguably the two greatest Elves (both female) use magia to "bulldoze" dwellings that Sauron has used: Galadriel throwing down the walls of Dol Guldur after the War of the Ring is over (as described in Appendix B), and (very similarly), Lúthien using her power to throw down the gates and walls of the tower of Minas Tirith that Finrod had built on Tol Sirion and had been occupied by Sauron after the fall of Fingolfin. But since these actions, as "destructive" as they were, were for the purpose of freeing wills from domination, they are examples of magic used for good.
But what is Tolkien talking about when he discusses the Elves using goetic effects in an artistic way, that is not meant to deceive? I am at a loss to think of any specific event in his writings that he is referring to. Is he simply describing a truism that is not actually reflected in the Tale? The only thing that I can think of is the Wood Elves fires in The Hobbit (which really do seem to be intended to deceive, but maybe Tolkien is saying here that they were not. Better examples, I suppose (though they don't really contain specific examples) is the reference to the deceits of the Lady of the Wood by Boromir and Éomer (and, for that matter, Eorl). I'd be very curious to hear what others have to say about this.
Tolkien then goes on to discuss how both sides live mainly by "ordinary means" with the Enemy and those who served him going in for "machinery". He points out that the main advantage of magia is immediacy speed and reduction of labour, but that if like the Enemy you have at your command abundant slave-labour as well as machines, the need for magia becomes greatly reduced. He then makes this important point:
Of course another factor then comes in, a moral or pathological one: the tyrants lose sight of objects, become cruel, and like smashing, hurting, and defiling as such. It would no doubt be possible to defend poor Lotho's introduction of more efficient mills; but not of Sharkey and Sandyman's use of them
I think this statement does a good job of clarifying Tolkien's objection to "progress". It is not the technological advances that he objects to per se; it is the virtually inevitable misuse of that technology that is the problem.
Finally, he points out the "magic" that is used in his Tale is not of the kind that can be developed through "lore" or spells, but rather is an "inherent power not possessed or attainable by Men as such." He adds that Aragorn's "'healing' might be regarded as 'magical', or at least a blend of magic with pharmacy and 'hypnotic' processes." But he points out that Aragorn was not really a pure "Man" but "at long remove one of the 'children of Lúthien'. (He adds in a note to this paragraph that the Numenorians used "spells" in making swords, but they also have Elvish blood, of course.)
I am particularly interested in his comment about Aragorn using "hypnotic' processes" in his healing. How very interesting. That is not something that I would have ever considered, but after reading that, it seems rather obvious.