So it's a magic shortbow, but I don't see the purpose of picking up this spell over other attack cantrips or just casing a shortbow. I guess it's cheaper and more handy option, but it costs a whole cantrip.

I also figured it would do magic damage for resistance, like shillelagh but it's just magically propelled.

If I'm reading this correctly it says "throwing it OR hurling it with a sling". Does that make the sling optional? Saying both of those feels redundant and "throwing" is a mechanical thing already in the game.

It makes a "ranged spell attack" so its magic damage. You can choose to throw it with a 60ft range or use a sling to make it go further but with less accuracy.(30/120)

One of the main benifits is its a ranged attack that you can give to another creature, but said creature throws it with your modifiers. You could give it to someone who couldnt usualy do any sort of ranged damage. A peasent throwing rocks vs a peasent throwing MAGIC rocks...

Or go warlock give the pebbles to his/her familiar and get them pelting your enemies from above with them. Its a bonus action to cast so it doesnt eat to much action economy either.

A fairly under rated spell in my opinion.

That's pretty much the exact answer I was looking for- thanks! 
I didn't consider the use with a familiar- especially with a non-combat familiar like the sprite this could essentially give you an extra 3 shots with a shortbow for the cost of a bonus action.
It doesn't seem /optimal/ but I can definitely see it's utility. It's just a hard choice to pick this over the other cantrips that generally provide either more damage or more utility. It's a "team play" spell.

Damage on this is pretty good since you can add your spell mod to it. So it has a minimum of 3-5 (depending on your stats) and a max of like 9-11(again depending). I'd prefer this over something like a firebolt. 

So would you throw it as part of the cantrip or would that be a separate action? I think I know the answer but I just wanna double check.

It's a bonus action to cast.  So you could cast it as a bonus action, then take your action as a attack.

What rule book addition is this from? It's not from the PHB is it??

To the point: It's phenomenal! Add a +2 sling to this and you are looking at some serious business and add a haste spell to this and you have more firepower than a Palestinian refugee camp!

Aaaand it says in the spell description where it's from - nvm. Thanks!

So your turn would go something like this: Bonus Action, cast Magic Stone to make sling ammo magic. Action, attack with sling loaded with Magic Stone ammo. As opposed to: Bonus Action, cast Magic Stone on pebbles and throw a pebble as an attack. Action, throw another Magic Stone pebble as an attack.

wait so this cantrip doesn't add a dice when you get higher level????

I thinks its something mainly for low level play but tactical as you now basically created 3 spells that are 1d6 + spell casting modifier.essentially a 3d6+spellcasting for a cantrip