So unlike counterspell, this one was untouched. I like it.

Hello, we have a question: Can this spell remove magic from a magic object, such as a magic weapon, cloak of protection, winged boots, etc.? 

Nope. It only ends spells. 

You should probably think of this as Dispel Spell.

only if said object is under the effects of a spell of equal or lesser level to the spell slot used to cast this one. I think most magical items like the ones you listed are "innately magical" and thus wouldn't count for this effect.

So for example, a normal weapon under the effects of the Magic Weapon spell would have its magic dispelled, but a +1 weapon would not, as it's innately magical.

If you had used Nystul's Magical Aura to then Magic Jar a non-humanoid, it seems NMA might immediately end upon any casting of this within range but dispelling MJ depends on spellcasting ability of dispeller to defeat a DC 16 check.  My question is to make sure that just dispelling NMA doesnt also happen to immediately dispel MJ anyway because now you're possessing a creature type that is not allowed - are you essentially shunted out of the possessed body anyway no matter the DC check?  Or does the "until dispelled" duration of MJ essentially mean that pre-requisites to casting are of zero consequence post-casting? I think its the latter but I want to make sure that's not just wishful thinking.  In that case, dispelling NMA is really only of consequence of changing  that creature's type back to its original but not  necessarily ending MJ/possession.

I'm also confused how the first and second sentence make any sense together, or at least how "magical effect" has any meaning.  If you choose a "magical effect" you are are by definition not making a creature or object the target.  The target is the effect.  There is no ongoing spell on that target - it is the effect of the spell itself being named.  I think this is intended to occur when you want to be like "I think someone or something is magically invisible nearby."  But there could be 1000 things magically invisible nearby.  Or just one or two.  I'm not clear how targeting works in that scenario even though the first sentence clearly indicates you can choose a magical effect within range.  Perhaps they need to add something like "or lower on the target, or as many targets affected by the magical effect, ends."

I do think its the intent that a 6th level upcasting, combined with "I want to end all magical forms of possession within 120 ft of me" would end all instances of MJ in that area.

Again, I hope this isnt' wishful thinkiing as I'd love to have for example someone do just that - only to find that every single other person in the pub - friend, foe, stranger - are ALL changed into their original something else when they were only suspect of at least two (cause youd just choose the target if you were suspect of only one).  Suddenly, you realize you've not only uncovered something bigger but now everyone else in the immediate vicinity knows you know it too.

It temporarily ends the effect.  Ie... I had a villian flying on a magic carpet.  One of my players cast dispel magic on the carpet and gravity took effect.  After the fall damage they got a flying carpet. 

Quote from Swin >>

It temporarily ends the effect.  Ie... I had a villian flying on a magic carpet.  One of my players cast dispel magic on the carpet and gravity took effect.  After the fall damage they got a flying carpet. 

Technically that is not supposed to happen under the Rules As Written. As several people have pointed out above, this spell ends spells affecting an object; it doesn't take away the magical properties of a magic item. Spells do what they say they do; they don't do anything else.

Quote from Swin >>

It temporarily ends the effect.  Ie... I had a villian flying on a magic carpet.  One of my players cast dispel magic on the carpet and gravity took effect.  After the fall damage they got a flying carpet. 

 the only way that would have worked is if it was a normal carpet somehow enchanted with a fly spell or something to that effect. A flying carpet is a magic item which doesn't end with dispel magic.

How does this interact with spells where the dispel caster does not know what to target?

Ex.)

If someone is running around invisible, can someone dispel invisibility even though they don't know where to target.

If someone has cast mirror image, and they say they are targeting the magical effect, not a particular instance of an illusion / the creature - does it dispel all mirror image clones?

Quote from Scriptabit >>

How does this interact with spells where the dispel caster does not know what to target?

Ex.)

If someone is running around invisible, can someone dispel invisibility even though they don't know where to target.

If someone has cast mirror image, and they say they are targeting the magical effect, not a particular instance of an illusion / the creature - does it dispel all mirror image clones?

The spell doesn't say you have to be able to see the target, but generally to be able to target something you do need to have a clear path to it, which means you have to know where it is. Some spells override this general rule, but this one doesn't.

Casting this spell on a creature who's using Mirror Image will instantly end the Mirror Image effect, dispelling all the duplicates. You don't need to target "the magical effect", you can just target the creature. (Mirror Image only protects against attacks.)

Thanks for the clear explanation!

No problem!