How exactly does the virtue Magic Sensitivity work? Our troupe has two schools of thought:
Camp One argues that it performs as an enhanced second sight - That is, it allows the detection of invisible items/creatures, senses magic auras, detects lingering magic spells or supernatural ability uses and finds regio entrances. However, it only works on magic-aligned subjects. Eg it would not pick up an infernal-aligned ability use, or detect an invisible faerie creature.
They base the additional power of the virtue on the fact that Magic sensitivity lowers one's magic resist, and therefore should be more powerful than an ordinary minor virtue.
Camp two thinks that it's far less powerful than that - Instead, they posit that the ability allows one to investigate an object or location and determine if it is Magic or not. Eg, a particular rusted sword shows up as Magical once investigated, without revealing what the object does. In addition, the ability allows discovery of regio entrances, similar to second sight.
The first group's reasoning makes the virtue rather powerful for it's cost, but the second group's approach seems to make it not worth the loss of magic resist.
Can someone give a comprehensive explanation of what the ability does?
As written, the virtue is a lot closer to camp two than camp one.
I'd personally suggest a middle-ground between the two. Yes, magical sensitivity allows you to investigate something you believe is magic. If you pick up a magical sword, and get all tingly from it then - well - it's obvious that the sword is magic.
Likewise, I would allow you to 'detect' magical things you are otherwise unaware of. However, take that to mean 'there is something magical here, and I know it'. You cannot precisely identify the source of the magic (and perhaps not even the type of origin!) without actively investigating. If you walk past a regio entrace, the hairs on your neck might stand up and you might be able to smell the magic. But where is it coming from? What, precisely, is causing it? Those are the sort of things you'd need to start poking around for.
As to the drawback of the virtue...doesn't really factor into anything. Not all virtues are created equal - just a some flaws are a lot more severe than others. Many aren't even really intended to be taken (regularly) by magi. And magical sensitivity could get a lot more mileage on a companion or a grog than on a wizard.
The crucial use of magic sensitivity is that it also allows you to detect the presence of vis in an item. All the regio entrance detecting, illusion detecting stuff can also be done by second sight (and as it's explicitly sight rather than "being sensitive to" if you're hunting invisible people, second sight is much better). However, it also allows you to detect vis. Without Vim magic, Magic Sensitivity is the main way of telling if there's vis in something. You can use Magic Lore to tell if something is the type of object that may contain vis, but you can't be sure. Therefore, Magic Sensitivity is amazingly useful for vis-collecting grogs, redcaps trading in vis, and for hedge mages who use vis it's vital they either have it or have a trusted ally with it so they know whether or not they have enough for the project at hand.