this, I can't think of Gandalf or Sauron in the frames of a typical Wizard. They seem more like extremely seasoned adventurers that are so powerful and knowledgeable of the world around them that both their allies and foes fear them as if they were demigods. As for their actual magic, it doesn't have to be pewpew fireballs; the simple fact they can do ANYTHING that can be considered magic scares the shit out of the avarage Middle-Earther.
don't have a clue why they don't flaunt the shit though. Pew pew fireball gandalf would have been awesome.