Magnifico: Well, you’re young. You don’t know anything, really…(To Asha)
Hint: This scene from Wish 2023, both the song and the conversation between King Magnifico and Asha, are very important.
He's right. He knew how the outside world was dangerous. Everything King Magnifico did was right as the path of the King he chose. But the reason that makes him a villain is because he shuts down both himself and his people. And forget those desires to stave off treason and greed. This is where people's independent thinking and freedom are closed. This is selfishness and he did what he thought was right. When I say he only cares about himself It comes from his past suffering and trauma. That's why he was afraid of Asha and tried to seal those wishes. The only thing he trusted was himself. Punch Whalen is similar to Magnifico, but as Asha said in Tsubasa of Phantasia, Magnifico ultimately only cares about himself. But Punch cares about her friends and people even though she's selfish, narcissistic, more cool than anyone else and has high confidence in herself.
That's why Punch wasn't even affected or corrupted by the dark magic in her heart because she cares about many lives but does not care for herself at all just like Sonic.(Chip: No matter what happens, you never waver. Your heart doesn’t give into the night or the darkness’ temptations.) That's what makes Magnifico the real villain. He's not the open heart that's what makes him entirely different from Punch even though she chose to be the villain for the people she cares about.