In the world where Phaeselis exists, Atheism is simply regarded as a religion. This is simply because most Atheists have blind faith in their philosophers and priests, and some do engage in proselyting. In any case, Atheists do not believe that there is a Creator, and deny that a Redeemer is coming to save them from their "evil" deeds. They also disbelieve in any energy field, and they most certainly believe in the doctrine of Separation rather than the doctrine of Connection.
Atheism is also the proof that Religion doesn't always work. The Churches in Phaeselis and their metaphysical systems don't work because they simply go against the human Spirit as they evolve along. Sometimes people just balk in many different ways. This does not prove that atheism is right or correct, it just proves that strict rules always produce a spirit of rebellion for true freedom. Atheism, at it's core, is a rejection of religion. It's just that the rejection of the existence of the Divine is apart of that rejection.
Atheism does not produce Divine Magic, usually as expected (there are exceptions, though -- Atheist Clerics would be good or evil and take most any two domains). However, Source is Source, and Atheist psions do exist producing most any psionic effect. Atheist wizards, sorcerers, and other arcane magic users also exist. Some atheistic sorcerers and wizards engage in displaying fake divine magic.