Magic Loop is a technique for knitting in the round with a circular needle that has a long cable. The trick is that you leave a loop of empty cable to the left and also to the right of the work. It's a great technique, which works for big and also very small knitting in the round. You can find more about basic Magic Loop here Magic Loop Rocks!.
Modified Magic Loop is for larger work, which doesn't need two loops but is too small for the whole cable to be in use. Just leave a loop of cable between the first and last stitches in the round as you work.
For more knitting tips that will help with the Witchy Tube Top, see:
Preventing Uneven Ribs
Cast-Ons: Keeping Count
Black Attack: Working with Dark Yarn
Adding a Color in the Round
Quick and Dirty Striping
Closing the Bind-Off Gap