But it's still fantasy (if Nightterror, Abyss, and the flying dragons in Nightmare's stage were any indication), regardless if it's concentrated on SoulCalibur and Soul Edge or not. In fact, hasn't the series been referenced as a "historical fantasy?" As far as I'm concerned, everything supernatural/fantasy still relates to the swords. No one knows the extent of Viola and ZWEI's powers or were they came from. In fact, they might directly be related to Astral Chaos, which was brought by Soul Edge in story mode. Ever notice that when EIN or Viola's orb appears, they come through a bubble/portal that looks like the sphere in Astral Chaos?
As far as SoulCalibur "Not supposed to be set in a magical land" it's still not, but it's not up to you to determine which direction it goes. Besides, the changes we've seen in SCV aren't even that severe compared to the likes of DmC.