"The lesser rings were only essays of the craft before it was full-grown, and to the Elven-smiths they were but trifles..."
-Gandalf, Fellowship of the Rings, Shadow of the Past
Magic Rings are only mentioned a handful of times in The Lord of the Rings, magic rings, or lesser rings, are rings with magic powers (powers unidentified), but less potent. They were made around the same time as the Rings of Power and there were, presumably, many of them since "In Eregion long ago many Elven-rings were made" and there are only twenty Rings of Power, unless twenty is considered "many" rings. Gandalf states that though the Elves who forged them thought little of them, he still thinks they are dangerous for mortals.
Sauron took the owners of many of these rings as slaves along with the Nine.
In The Lord of the Rings Online, "Narchuil" was one of the lesser rings forged by the elven-smiths. It was worn by Amarthiel, who served the Witch-king of Angmar.
In the ancient days of the Second Age, before the Fall of Númenor, many, many rings were forged, the craft being taught by Sauron. These rings aided in the use of spells and magical craft, and thus were widely popular with the Elves. Sauron, then known as "Lord of the Gifts" claimed he wished to make Middle-earth as fair as Valinor, and it seemed he convinced the elves to think these rings could do so.
After the forging of the One Ring, Sauron began drawing these lesser rings to himself. This was not difficult, for the One Ring gave him the strength to subdue the wielders of these powerful artifacts. Once gathered, Sauron could disperse them among his captains, making them all mighty champions whom he could back up at will with his own strength via the magic ring connection. After the Last Alliance of Elves and Men and the First Fall of Sauron, these rings were dispersed through the land. Some were taken from dead warriors, others, borne away by the frightened, still living servants of Sauron, others were lost and little is known of what happened to them until the War of the Ring.
At the time of the War of the Ring, Sauron gathered again the lesser rings to himself. But this time, he kept a great deal of them so as to advance his own abilities. Though not stated in the books or movies, it seems reasonable to believe that some were given again to his commanders as well.
Their ultimate fates are unknown, nor is it known whether or not their powers were bound to the power of the One Ring. If they were, then their power would have failed with the destruction of the One.
The full extent of the rings' power is unknown. They were, to an extent, like the One Ring when it came to temptation. They would give a being strength, magical ability, and the power to dominate other wills.
It is also believed (though again, not stated) that these rings also had certain fields in which they were strongest. For example, one ring may rule over stone, while another controls ice. This, however, is not known fact, and only stems from what is known about the Rings of Power, assuming that the lesser rings are much like them.
Also in the 1995-1997 Middle-earth Collectible Card Game several cards describing and depicting lesser rings were released, for example "The Oracle's Ring", "Wizard's Ring" and "Magic Rings" of different power (lore, stealth, courage, etc.).
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