The Wizard Competition is a magical battle between wizarding siblings to decide who will become the Family Wizard (Full Wizard). The reason why there's a Wizard Competition is because only one wizarding sibling that is becoming the Family Wizard must be proved to be worthy and responsible with his/her powers.
In the movie
summary- The movie starts off as the russo family goesto hawaii... alex gets mad at her mom and wishes that her parents never met... unfortunately she is holding the most powerful wand wen she wishes that.. so it becomes true...
then eventually alex,max and justin dont exist too so they start to forget their childhood and youngest to oldest they start dissapearing..suddnely max dissapears and they have to find the stone of dreams(stone of dreams is a stone that provides one wish for a wizard) to reverse the spell b4 they vanish too so they ask a tourist guider for a map who apparently is a wizard too.... he has a parrot who was a girl b4 and he also needs the stone to change her back.
right wen the kids get the the stone, the parot steals it..... so they come back and see that their dad has the most powerful wand and they ask him how to reverse the spell... of course they dont know him..
the only way to save justin and alex is that they should hold the family wizard compeetiotion.... alex ends up winning but then she doesnt know wat spell to reverse so she cries...
justin ends up dissapearin too because alex doesnt know how to fix wat she did just then teresa comes with the stone..
alex then gives up her powers to reverse the spell/the wish she wished b4 and then everytings back to normal. :)
In the finale
The wizard competition in the finale has a different setup then in the movie . possibly because the competition is different each time, the Wizard Council created a new competition because Alex and Justin already did the battle challenge, or the battlefield challenge occurred because Alex and Justin were desperate for time.
The competition began with a game show round hosted by Rootie Tootietootie and judged by Professor Crumbs and the rest of the Wizard Council where the three siblings had to buzz in and provide the appropriate spells based on the given result, with each correct response worth 150 points and one three-part question worth 250 where they are given the spells and must provide the effect.
For the second round, the siblings had to prepare a fresh-breath potion for Professor Crumbs (Rootie Tootietootie's idea). For the Russos, the gryphon they had to use for the potion broke free and carried off Harper and Zeke. Alex talked Max and Justin into taking their time outs (45 minutes) at the same time to save them. They succeeded, but did not make it back in time, and so all were disqualified and lost their powers. Justin and Max blamed Alex and avoided her or made her life miserable for months, until they managed to work together to convince Jerry to keep the Sub Station open. At which point they were flashed back to the competion and were told Round Two had just ended. Because Jerry, Kelbo, and Megan let the competition come between them (something that Jerry's children had declared in "Retest" wouldn't happen to them), the Wizard Council planned the gryphon attack to test if Alex, Justin, and Max would do the same.
For Round Three, the siblings are back in a game show and are shown various times in their lives when magic went awry and must buzz in with an appropriate way to solve it with magic (100 points each).
For the final round, the siblings must hop on boulders to cross a lava pit to reach the Labyrinth of Stone, a massive maze. There are at least two traps that look like checkpoints, but when a sibling places their wand on it, they are sealed in. The maze walls are impervious to spells except blasting and Gothru Mothru. The Labyrinth leads to the tunnel of mist, where the siblings must use Threemetris Movetris to bypass a laser grid, and then exit the tunnel gaining the points from the Labyrinth (it is unknown how much the Labyrinth is worth, except that it is between 50 and 850 points).
At the end, Professor Crumbs bestows full wizard status on the wizard with the most points.