There is a spell hidden in each town. Their magic cost depends on your Magic level. The only required spells are Jump and Fairy and Reflect. Sheild reduces damage by 50%; Jump doubles your jump; Life restores 3 hearts; Fairy allows you to fly and pass through keyholds; Fire lets you shoot fireballs from your sword; Reflect lets you block fire and reflect magic waves; Spell turns all monsters into blobs and unlocks the Magic Key at the end of Kasuto; Thunder kills everything on the screen:

Fairy
Find the Water of Life behind a boulder in the swamp, take it to Mido

Fire
Examine the fountain in Nabooru then talk to the thirsty woman

Jump
Find the Trophy north of Zelda and take it to Ruto

Life Find a mirror in an empty house in Saria and take it next door

Reflect
Find the child in the origin of the river in the maze and take him to Darunia

Shield
Talk to the old man in Rauru

Spell
Talk to the old man in Kasuto (you must hammer a tree in the woods farthest to the east)

Thunder
Once you have everything else, talk to the man in the old ghost town of Kasuto