This looks really odd in relation to other fediverse software; Why /magic and required to be on the root of the domain? Why hard-require routing the domain part of the user ID when .well-known/webfinger exists? Why is there a X-Open-Web-Auth header which the spec only describes as “its purpose is unclear from the code”?
So many questions.
I definitely like the idea of distributed sign-in, Solid did a decent work of that many years ago after all. This particular proposal just looks rather odd.