Unless magic upsets or replaces one of the fundamental forces (gravity, strong interaction, weak interaction, electromagnetism), there's no reason that everything that works in the mundane world wouldn't work in the magical world. Having technology not work would raise some very difficult problems, such as how would people be able to move between the worlds and not, y'know, die. The exact same basic forces are the ones that allow basic chemistry and biology to work. If life requires something in the magical world to exist in order to replace one of those fundamental forces, it should fail in a world without it, just as someone from a non-magical world should die if one of the fundamental forces their biology relies on suddenly vanishes.
The only reason why something wouldn't work is because something is actively, intentionally, and selectively interfering with specific cases of basic physics or chemistry. If, for example, a digital camera don't work, how does anything have functioning eyes? Both eyes and camera use the same basic physics; light is collected and diffracted through a lens to fall on a material that releases electrons when hit by photons. You can work through the all the elements of a digital camera and see the same basic physics would also apply to lifeforms. The only way you could have eyes working and cameras not is if something is very specifically interfering with the ability of cameras.
So, the safest assumption is that technology will work perfectly well in the magical world. So why don't they use it?
Let's say that, however magic works, at its basic level it's the cheat code to the universe. The same basic forces work the same way, it's just the magic allows you to alter reality in some specific ways to cause specific effects. Dragons shouldn't be able to fly based on normal biology; the cheat code alters gravity's effect on them when in flight. Wizard throws a fireball? The cheat code is creating an area of localized extreme temperature that turns the air inside it into a plasma, containing it until it hits something it's thrown at, and so on.
Magic would, therefore, allow you to do things you'd require a very sufficiently developed level of technology to duplicate. If the ability to use magic is common enough that wizards could be used on large construction projects to raise material into the air, there'd be no particular reason to, for instance, develop cranes. So society could do things that it would otherwise need technology to do. Two things could result: first, magic users might actively oppose the development of technology that threatens their monopoly; second, the existence of magic could short-circuit the ability to create such tech. If, in the age when humans were just poking around on ships, magic users could somehow magically determine their exact location, there'd be no particular need to develop navigation aids like the compass and the sextant, nor anything that comes from them, because what you had was much better and so you'd never have felt the need to develop the technologies that ends up with 20th century navigation technology, which is finally equivalent to the magical equivalent. And the same argument could be applied to other things. Why would medicine develop if magic was already available to deal with illness and injuries? If magic can control heat, what's the impetus for developing refrigeration or air conditioning?
In short, it puts the magical world in the same place as the various worlds in Turtledove's short story "The Road Not Taken" who stumble on the secret of controlling gravity. With that technology, further scientific advance pretty much stops for the culture because they don't need more advanced tech.
