The original magi are the three kings, also called the wise men, who brought gifts to the baby Jesus just after he was born. They brought him gold, frankincense, and myrrh because these were objects of great value. However, these gifts did not require sacrifice on the part of the givers; the kings were wealthy and so the value of their gifts was of no consequence to them. For Jim and Della Dillingham, on the other hand, the gifts that they give to each other require great personal sacrifice. Della sells her beautiful hair, her most prized possession, so that she can buy Jim a chain for his most prized possession, his gold watch. Jim, though, sells this watch so that he can buy Della combs for her beautiful hair. The narrator calls them
two foolish children . . . who most unwisely sacrificed for each other the greatest treasures of their house. But in a last word to the wise of these days let it be said that of all who give gifts these two were the wisest. Of all who give and receive gifts, such as they are the wisest. Everywhere they are wisest. They are the magi.
Therefore, in the end, the narrator says that Jim and Della are actually the wisest, wiser even than the original magi, because they realize something the three kings did not: the value of personal sacrifice in order to make the one you love happy. The gifts of the original magi were generous, to be sure, but Jim and Della's gifts were generous in a whole new, much more significant, way.