The night elves outlawed all arcane magic after the War of the Ancients -- they argued that it had drawn the Legion to their world, and would inevitably do so again. This of course eventually led to the exile of the Highborne to the Eastern Kingdoms and the establishment of Quel'Thalas.
Would it have made any difference though? I mean, if the Legion already knew Azeroth's location and existence -- no amount of magic used would have changed that reality, as their forces began to slowly rebuild. In fact, arcane magic did indeed play a significant role in destroying the Legion invaders -- as can be seen from Illidan's past visions. What would have happened had they allowed the Highborne to practice their arts unhindered? Perhaps giving them a section of Ashenvale? Dath'Remar could have used the Runestones to mask any use of magical activity from outside threats as well, I'm not sure why he and Malfurion never tried to reach a compromise agreement. The Well of Eternity would have made the Highborne incredibly powerful, and they could have united with the priestesses and the druids to bolster kaldorei society and the military to heights nearly unimagined.
Which brings us to Illidan's creating the Well of Eternity -- he argued that had he not done so, the night elves would have no way to fight back when the Legion eventually returned. Whether this is accurate or not is debatable. The Well created the moonwells -- and possibly permeates Kalimdor with its ambient energies, strengthening the kaldorei. But did it really make a major difference, when the Legion did return, during the Third War and their last failed invasion?