The Magic Rock is the player's companion throughout the game. He appears on-screen to give quests, learns skills for the player, and tends to make bad puns. Historically, he used to be located on the top center of the screen and used to act as a menu. The menu function has been replaced by the iMG bubble, on the top left of the screen. The rock himself now sits on your Home Street and in your backyard, reading a nondescript tome, where he acts as a guide to changing the look of your street and house and where he racks up imagination for you based on visits and actions by others on your home street.
The Magic Rock used to be called a "Familiar," and in-game references varied between Magic Rock and Familiar.