How does Shakespeare create a magical atmosphere in the first scene of act 2 in A Midsummer Night's Dream?

Shakespeare creates a magical atmosphere in this scene by immersing us in the forest world of the fairies. The scene opens with a fairy's speech, which clearly sets this place apart from the human environment we know so well. Fairies, unlike humans, can fly about swiftly in this whimsical sphere. As the fairy states,

I do wander everywhere
 Swifter than the moon’s sphere.

We're also invited into the quarrel between Oberon and Titania that is upsetting the weather in the human world and also causing discord in the fairy world. We learn, as we hear of the quarrel over the Indian boy, that this is a world of tiny creatures that can fit into acorn cups:


all their elves for fear
Creep into acorn cups and hide them there.


Despite the quarrel upsetting this kingdom, the scene is filled with enticing, whimsical imagery that make it clear we are in a magical world usually hidden from humans.