I'm having a hard time finding anything about using vinyl on magic bands, so I thought I would post my experience.
I designed the decals in Silhouette Studio and cut them out of Orcale 651 vinyl. I'm under the impression this is what people on Etsy are making their Magic Band decals with. I used transfer tape to move the design over all at once, but I had a difficult time getting the vinyl to stick - I had to really rub it down and oh so carefully peel off the transfer tape, sometimes having to pick at the vinyl to get it to release from the tape and stick to the band. I then hit the bands with a hair dryer on high heat to warm it up and rubbed down the vinyl more - the heat helps the adhesive activate and adhere better. I was worried the heat might damage the chips in the band, but they worked perfectly.
We wore them on a week long trip, including a full day at the water parks. We wore them constantly, and we were not gentle with them. They held up surprisingly well. Some of the smaller pieces peeled up and were lost, but I was expecting that. Pieces that had skinny, pointed corners would fold up at the tip and leave a little raggedy bit, but we just clipped off the sticking-up parts with nail clippers.
WHAT I LEARNED - Orcale 651 is hard to get to stick to the band initially, but it holds up well. Designs with smooth, rounded shapes are better than things with points and corners. I think designs in multiple pieces are also better - it allowed the band room to flex without the vinyl puckering or wrinkling. I will absolutely use vinyl again, and I'm going to try that stronger, better Oracle 751 next time.