A witch is a altruist, they are using the energy levels from people , environment and elements to draw more energy to them for power they wish to use. Witches specialize, kind of like doctors lol. They either draw energy to harm , do good, or control their own environment. Some use it just for their own personal strength to have a deeper understanding of their own values.
A psychic, is someone who has a keen sense of another's being. They have many instinctive capabilities. One could have a great sense of a persons health while another has a sense of personality. They are also differ in how thy came into these instincts. Its not magic, they are either born with the instinct or they practice to develop it.
Both use a greater power , neither is real magic. We all have energy and can practice to develop how keen we are with it and what we want to do with it. The difference between the tow of these people is what they are doing with their gifts.
As for your dream? Dreams are reflections a mirror of kinds, to what you did that day and the meaning is what your emotions are currently dealing with right now. Your subconscious puts together a movie it would understand by using what you did last as the backdrop, and what your currently worrying or trying to figure to as the issue.
Basically you are trying to figure out your own power and how much you control or can control in your life, the black eyes are you insecurities and you doubts about what you can do in your current situation. Since you won the first time, you have failed at something recently and doubt you own ability to fight back or stand up for your self to try it again. You are getting stronger but you secretly don't know if you can let go to try one more time. I would say since this is a mystical dream this has something to do with magic or relationships. If yo think relationships are romantic and magical then this is about that. You must feel this environment is safe to dream about it. Good luck to you, and positive thinking will help!