It kinda did in the Pertwee years. Check out the Daemons. But it's gone full blow magical realism these days. It all started with the Toymaker coming back.
He says it at 2:30-2:50:
The Daemons specifically addresses the ‘magic’ as not being magic in the story itself. It was usual in Who for years that any ‘magic’ on earth was usually just aliens. (Which is why the ‘cultural appropriation’ lime about SUTEKH/Pyramids last season was either clever or silly, depending on writer intent) Other good examples are things like The Stones of Blood, The Awakening, and Battlefield.
Off the top of my head, the only two ‘magical’ serials are Greatest Show and Curse of Fenric, but after something like State of Decay things are set up in Who as having the suggestion that supernatural elements were chased out of the universe by the Time Lords (something run with in the books, including Davies own one, and now explicitly being riffed on in the show itself.)