This is a clarification and compromise of the basic Detect Magic rules made between the players and the Dungeon Master. This reconciliation has brought the following resolutions:

Detect Magic displays a glow in the third round of concentration if the caster has line of sight to the item which means that, in the third round of concentration, all visible magic items in an area can be determined as such and looted accordingly. If there is no line-of-sight (such as within a chest or in the stomach of a beast), then the exact location of the aura in a 5' square is impossible.

Detect Magic is naturally resisted by all illusions. For example, if a person is concealed by Disguise Self, their disguise would be impervious to Detect Magic since their disguise is an illusion. Any magic items on the character would still be detectable with Detect Magic. Furthermore, if an illusion of a false wall is erected, physically concealing a magic item, the aura of the item will be noticed, but a pinpoint will not be possible since the caster would not have line of sight to the item.

Additionally, invisibility-type spells completely conceal any magical auras. If the same person from our previous example were to cast Invisibility on themselves, then they would have no auras whatsoever as far as Detect Magic is concerned.

Finally, Shadow illusions which duplicate spell effects detect as the base spell's school of magic. Magic Aura must still be cast in order to make other illusions more magically believable to have different auras.