The most important act in the entire play is the murder of King Duncan perpetrated by Macbeth and his wife. However, the actual murder is never seen by the audience but only suggested by what is going on outside, both before and after the deed is committed. Shakespeare must have had his reasons for not writing in a scene in which Macbeth steals into the King's bedchamber and kills him in a violent fashion; but we can only speculate about what Shakespeare's reasons were. For one thing, he always preferred dialogue to action. His forte was poetic diction. Action on a stage always looks awkward and faked. No doubt, Shakespeare felt he could arouse more emotion by suggesting what was going on in the bedchamber and what had gone on during the actual commission of the crime, than by trying to show it happening in real time. Even when Macduff discovers the murdered body, the audience is not taken into the inner room and shown the bloody scene but only learns about it through Macduff's descriptions and emotional reactions.
Shakespeare seemed to want to make Macbeth something more than a pure villain. He blames his behavior on his wife, on the three witches, on the inexorability of fate, and on Macbeth's mental illness. Showing him following an imaginary dagger is just one way of attempting to amelioriate the severity of his crime. The poor man can't help himself. He is hypnotized by a vision that is leading him into the death chamber against his will. Shakespeare must want us to regard Macbeth as a tragic hero rather than as a pure villain like Richard III and Iago. Shakespeare finesses the seemingly obligatory scene in which Macbeth stabs the old King in his bed, cuts his throat, and generally butchers him. We are shown what leads up to it and shown the aftermath but not shown the actual murder, presumably because it would negatively influence our impression of Macbeth.
It is significant that Macbeth does not personally take part in the murder of Banquo or the murders of Macduff's wife and children either.
The bloody dagger, in Act II, scene i of Macbeth, foreshadows Macbeth's murder of Duncan. Initially,the bloody dagger leading to Macbeth is "showing" Macbeth what must be done.
Duncan must be murdered.
That said, the dagger itself represents a couple different things. First, the dagger could be seen to be Macbeth's overly ambitious nature. Upon being feminized by his wife (through her questioning his manhood), Macbeth knows that he must murder Duncan to gain both the crown and his wife's support. the dagger, then, represents the means by which he can succeed.
Second, the dagger is an apparition, and Macbeth realizes it.
Is this a dagger which I see before me,
The handle toward my hand? Come, let me clutch thee.
I have thee not, and yet I see thee still.
Art thou not, fatal vision, sensible
To feeling as to sight? Or art thou but
A dagger of the mind, a false creation,
Proceeding from the heat-oppressed brain? (II,i)
In this passage, Macbeth states that he sees the dagger, but is unable to grasp it. He also recognizes that he may be going a little mad, as seen by his "heat-oppressed brain."
Therefore, the dagger is not an act of witchcraft. Instead, it is a figment of Macbeth's imagination and his ambitious nature materializing before him.