dnd-5emagic-itemsspellsvision-and-light
The Darkness spell says (PHB 230):
…nonmagical light can't illuminate it.
it also specifies:
If any of this spell's area overlaps with an area of light created by a spell of 2nd level or lower, the spell that created the light is dispelled.
So my question is: what is considered magical light? is it only light from a spell or would light from a magical item (for example flame tongue sword) also be considered magical and, if so, what level would that light be considered?
The cloud of Darkness would immediately snuff out the Light as soon as it was created. Note that the spell's text doesn't mention any restrictions or requirements involving which area effect, the Darkness or the Light, is created first. All that they need to do is overlap one another. If they overlap, even slightly, the Darkness instantly dispels the Light regardless of which was cast first.
The preferred spell to remove the entire cloud of Darkness is the 3rd-level evocation spell Daylight. However, theoretically, a 2nd-level Continual Flame spell cast with a 3rd-level spell slot could create light equivalent to a torch that would partially illuminate the Darkness but not permanently dispel it.
Entire description of Darkness (Player's Handbook, page 230):
Magical darkness spreads from a point you choose within range to fill a 15-foot-radius sphere for the duration. The darkness spreads around corners. A creature with darkvision can’t see through this darkness, and nonmagical light can’t illuminate it. If the point you choose is on an object you are holding or one that isn’t being worn or carried, the darkness emanates from the object and moves with it. Completely covering the source of the darkness with an opaque object, such as a bowl or a helm, blocks the darkness. If any of this spell’s area overlaps with an area of light created by a spell of 2nd level or lower, the spell that created the light is dispelled.
Emphasis mine. The spell's text implies that while nonmagical light cannot illuminate the magical darkness, magical light powerful enough not to immediately fizzle out can and will at least partially illuminate the darkened area.
The darkness spell is described in such a way as to give the impression that it is something tangible that spills out around corners, but can be blocked by objects. Think of darkness as not unlike a fog cloud spell.
The darkness spreads around corners. [...] Completely covering the source of the darkness with an opaque object, such as a bowl or a helm, blocks the darkness.
Likewise, darkness engulfs non-magical light - or rather, it cannot be illuminated by non-magical light. This means that magical light can illuminate it.
Light in 5e is described as having bounds. Faerie fire indicates that afflicted creatures shed dim light, which only means that area imposes disadvantage on Wisdom (Perception) checks; attacking into dim light behaves as normal.
This is where location comes into play. The bounds of the dim light must penetrate the bounds of the darkness spell in order to be seen. Put another way, there must be no darkness between you and the creature. You need to check the positions and radius of the area of darkness and creatures affected by the faerie fire.
If the radius of the darkness spell's area completely engulfs the radius of the dim light, they cannot be seen by you from any angle. If they are 5 feet or more away from the center of the darkness, they can be seen from the direction the dim light is from the center. This is sort of mathy, but really no more difficult than normal line of sight. Darkness spills out around corners continuously, so just visualize or draw the circles and draw a line to the center of the dim light.
Advantage and disadvantage hinge on who can see whom. In general, you have disadvantage on attacks against targets you cannot see, and advantage on attacks against targets who can't see you. However, when neither target can see each other (such as when a target is standing in darkness and you are not), you have neither disadvantage or disadvantage.
From the basic rules on advantage:
If circumstances cause a roll to have both advantage and disadvantage, you are considered to have neither of them, and you roll one d20. This is true even if multiple circumstances impose disadvantage and only one grants advantage or vice versa.
This means that faerie fire's advantage only has an effect when no disadvantage is imposed. It is important to note that, as explained in the question, faerie fire must be cast at a level greater than 2nd, or darkness will dispel it.
You have advantage against:
You have disadvantage against:
You have neither advantage nor disadvantage against:
This answer hinges on the fact that the darkness spell is dark in 3 dimensions, much like a 15-foot radius of fog or smoke. I believe this is true because of how the darkness spills around corners and can be blocked by objects.
If the darkness spell only "darkens" objects and ground in its radius, then it makes sense to imply that the faerie fire penetrates through it, making line of sight meaningless. Is it a floating black orb, or is it a radius of darkened objects? Again, I say the former, but I would personally leave this up to the DM.
Best Answer
All light sources from magical spells and effects can illuminate a Darkness spell and that includes light from items such as Flame Tongue (RAW).
Of course if light created by magical items can pierce if not dispel magical darkness we would need to calculate their level based on rarity, which to my knowledge is not present.
A good reference however is the Spell scroll conversion on page 200 of the DMG. In it rare scrolls (which are technically considered magic items) harbour spells from 4th and 5th level. Considering Flame tongue is a rare sword, it would be up to your discretion to choose whether to assign it a level of 4 or 5.
That said Jeremy Crawford's statement on twitter implies that only spells cast by characters illuminate magical darkness, which I think makes for more engaging encounters.