Sakura Kinomoto and her friends are from a world very much like our own. Unlike our own, magic and mythological beings do exist, and there are humans who control them — or try to. Some people are simply innately magical, while others are thoroughly mundane, so most people don't believe in magic — many nonmagical people simply can't perceive it very well!
Magic is incredibly diverse in this universe. Most magic comes from a celestial body of some sort — most Western mages draw power from the Sun, while Chinese mages tend to draw power from the Moon. The cards created by Clow Reed are quite unique; most magic users simply create magical effects on their own. One important skill that most mages of sufficient power develop is precognition. The future sight of magic users has shaped much of the world's history.
One powerful wizard in particular was a man known as Clow Reed. The creator of the Sakura Cards (originally known as the Clow Cards), his perfect visions of the future allowed him to set his plans in motion centuries before the pieces would fall into places. Clow Reed was half English and half Chinese, and the most powerful clan of magic users in China — the Li Clan — are his descendents. And in a spiritual sense, Sakura is a descendent of his too — her father is Clow Reed's reincarnation.
The world is a very idyllic place. There is conflict, of course, but nobody seems to really be bad — misinformed, perhaps, or simply with incompatible goals, but there doesn't appear to be any evil.