You're right. Magic in Barovia is not accepted. It's like the medieval witch hunts, but not quite that bad. Healing magic is good, but kinda iffy. Arcane magic is really iffy, it's the cause of caliban.
If you cast magic around NPCs they will react automatically, and if you do magic infront of a PC garda they may also react. I've seen people punished for it. I am playing a native mage from Vallaki, and it's something that you can do, and it's a fun different type of character to play. Something so secretive that if it got out it could ruin everything, or change nothing at all, or even open new realms of rp!
Now, it's not Tepest. Tepest is where all magic is illegal and it is the inquisition into the witch hunts. Barovia is the secret mage place, Tepest is the banned mage place. And Dementlieu is the learned mage place. (aka: Barovian witches are hush hush about their magic, tepest witches do so in absolute secrecy or get killed, and Dementlieu sees wizards as being ok, but not sorcerers)
Now that being said, there is nothing against playing a Barovian who has had a particularly bad run in with magic and as such sees it as a threat more than others. Each character is going to be unique. Even my mage would react badly to seeing a necromancer summon the dead, or conjure a demon.
If you think the garda are too permissive with magic, play a harsh garda! I remember in the past there were garda who would not allow people to sell obviously magical items (scrolls, wands, staffs, glowy items).