The reason why AD&D worlds are created as they are is to facilitate the adventure. Getting caught up in world building to the point where the world building becomes a reason unto itself tends to create lots of worlds people appreciate abstractly as reading material and have difficulty applying concretely through play. See threads on planescape for one example.
Therein lies the issue - where you see the onus of magic prevalence set on the shoulders of the DM, I see that onus driven by the players interacting with the world with the DM filling the gaps. One approach requires a ton of prep-time and concrete lines to be drawn about where magic can or can't exist, while the other is a patch over a temporary gap in the lore.
"Dusk settles. The streetlamps illuminate to bathe the cobblestones in a soft orange glow. The sounds of hoofsteps echo from within the depths of misty alleys".
This is what I, the DM, have presented to the players. There's no inherent magic in any of these things, nor is there wonder - this is a mundane scene.
One player asks "how did those lamps come on? I didn't see any lamplighters at work".
You have a few options at your disposal:
- "Actually there are lamplighters lighting them, and one such lad throws up a ladder only a few feet away and busily gets to work".
- "Actually the lamps glow with a magical flame that requires no fuel".
- "Actually they were lit by lamplighters, you just didn't notice them at the time and I didn't mention them because it's so common a sight".
- "Actually you're not sure how those lamps lit themselves, but they did".
- "Actually the lamps are not wick and flame, but rather strange glass orbs that illuminate themselves and glow with a uniform whiteness"
Whatever option you choose has set a precedent in your world - if the street lamps are magic, then magic streetlamps will not be a rare sight, nor would it be bizarre to see other "mundane" magic at work. If street lamps are not magic, then the players can be awed when they arrive somewhere that the lamps are magical - it doesn't preclude the existence of magic street lamps elsewhere, but the players know how THESE lamps work at least. An issue was brought up (how the lamps get lit), an answer was given, the game can move on.
Here's the kicker though: the players aren't going to ask about streetlamps. They're playing Dungeons & Dragons, not City Planners & Civic Inspectors.
So, knowing that, I can either plan every meticulous detail of a magic/mundane hybridization world ahead of time, delineating how freely magic is available in the rare off-chance that some player gets too curious, or I can have some vague guidelines in my head as to the general level of magic in my setting and improvise based on that. I choose that latter, and anyone who doesn't is overthinking a likely non-issue, in my opinion.