Magical items and artifacts are attached to champions. Unless a card's special power says otherwise, they cannot be attached to realms, holdings, allies, or any other type of card. The proper way to attach magical items and artifacts is to place them underneath or near the champion's card, which is now carrying the item.
A Champion can have any number of magical items, but only one artifact - which must be from the same world as the champion (logos on the card must match). There are a few rare artifacts that can be attached to any champion in the game.
All magical items have (Off) or (Def) at the bottom of their description; artifacts do not. This stands for offensive and defensive. Offensive magical items are assumed to be directly affecting opposing champions, either in combat or while in their owners' pool. Defensive magical items are assumed to be affecting only the attached champion and have no influence over an opposing champion in battle or otherwise. Champions that are immune to magical items are generally only immune to offensive magical items. There are rare cases where a champion is immune to all or defensive magical items, which means that the level bonuses are ignored (but not the special power, since they do not affect an opponent during a round of battle). Both offensive and defensive magical items can be used when attacking or defending. The terms have nothing to do with which side of the battle a champion is on.
Artifacts are more powerful versions of magical items and are neither offensive nor defensive. Either a champion (or player) is immune to artifacts, or he isn't. Artifacts have vast and varied powers, affecting individual champions, all champions in a pool, altering the conditions of a battle, or even all of the above. Artifacts are so powerful that they come before magical items on the Order of Activation.
Opposing champions that are immune to artifacts are able to ignore any special powers that would directly affect them, such as the item's level bonus. If the special power of an artifact only affects the attached champion or his attachments, another card's immunity to artifacts would not negate that effect. An example would be the special power of the Death Rock (2/AR Chase), which only affects the attached champion and any allies played with him. On the other hand, a champion immune to artifacts would be able to totally ignore the level bonus and special powers of Barab's Goblet of Dissolution (5/AR Chase).