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To the best of my testing, Amplify and Dampen Magic work exactly like a +/- Spell Damage and Healing bonus to anyone attacking that target. So if your tank has +360 healing from amplify magic, a healer with +1500 healing would have +1860 healing against the tank.
Dampen Magic used to reduce damage as low as 1, but mages would dampen magic themselves and AoE a dozen or so Air Elementals in Silithus, so it was nerfed. I believe Dampen Magic cannot reduce the actual damage dealt below 50% of the base. Dampen applies before resistance checks.
Amp/Dampen have no effect on Vampiric Embrace and Bandages since they get no benefit from +healing.
When in doubt, your tank should have Amplify Magic.
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