It is indeed true that in any straight-up, arena style duel between a muggle and a wizard, the muggle is going to lose to the guy who can fire death rays from his wand, polymorph and animate nearby objects, hypnotize people, etc.
However, that does not mean 'Wizards rule, muggles drool, forever and ever amen.' The Wizards have the advantage of actually possessing superpowers, while the Muggles have only ordinary weapons. But this is not the same thing as saying that Muggles have no advantages of their own. So, what advantages could they possibly have? I'll try to list a few I've thought of.
Troop quality: It is important to remember that the average Muggle-on-the-street knows just as much about fighting as the average humble Wizard-on-the-street -- that is to say, absolutely nothing. But they're not the ones we're worried about here, as even at the height of Voldemort's second rampage over Britain, in book 7, the vast majority of the Wizarding population did exactly the same thing that the vast majority of the civilian population does during Muggle wars -- not fight in it. And since we're talking about who'd win the fight here, that means for troop quality we look at the other end of the population's bell curve... the combatants. The people who actually aspire to careers of going out and fucking up the other guy's shit. Note: an examination of the wizarding world's common weaknesses will be addressed later, under 'Tactical Ability' and 'Knowledge of the Enemy'. Right now I'm just looking at the three particular fighting factions of Wizarding Britain, and their specific characteristics as relative to the average ordinary wizard.
First up, the Aurors, the elite operatives of the Department of Magickal Law Enforcement. For a certain definition of "elite". They do have some of the better combat training that the Wizarding World can supply, and they've been in enough fights to not panic when the shooting starts... but really, did any Auror in the books do anything that impressive, as regards fighting? (Note: Tonks, Kingsley, and Mad-Eye don't count, as while they were Aurors, they are addressed in category two, the Order of the Phoenix.) The best you can say about the Aurors is that they are adequately trained and experienced at being police for civilian wizards... but they weren't able to tactically or strategically keep up with even the Death Eaters, who weren't exactly being led by a military genius. Also, they are subject to the Ministry of Magic's standard operating procedure and bureaucratic restrictions... which, given the Ministry of Magic's legendary stupidity, means that they're fighting handcuffed and in leg irons. So, forget the Aurors when it comes to needing to fill your serious warfighting needs.
The Order of the Phoenix: Dumbledore's private vigilante team, the Order was recruited from the best and brightest wizards he could find. And mostly they live up to that representation -- barring the odd outlier like Dung, the OotP members are indeed some of the best, and definitely the most motivated, wand slingers Wizarding Britain could muster. They even poached the best available from the Auror Corps. But even they still share many of the Wizarding World's common weaknesses. Chief among them being, with few exceptions they seemed entirely unable to emotionally grasp the fact that they were in a war at all, and that fighting a war means having to kill the enemy. Most of this is Dumbledore's fault, admitted... but pointing out that the Wizarding World's most elite fighting unit has one of the most hesitant and ineffective commanders around is legitimately spotting a weakness. So, the Order falls by the wayside by possessing almost every characteristic necessary to fight a war save two: one, having enough numbers to do the job (as they are the smallest of the factions, and have already recruited up to their maximum potential), and most importantly two, by not actually having the will to fight a war.
And last, we have The Death Eaters: Wand for wand, the Inner Circle of the Death Eaters matched up fairly well vs. the Order of the Phoenix. Not entirely equal to the task, but still, it really did come down to the DEs vs. the Order, the Aurors were just getting in the way. And the DEs do have some points in their favor none of the other Wizarding contestants here possess. For one thing, they definitely don't have any hesitation about shooting to kill. Neither are they sentimentally attached to the notions of treating life like a fair dueling situation. They come closest to all of the combatants available in the Wizarding World of understanding the muggle POV when it comes to war. Except for the fact that they're largely a bunch of backshooting cowards, whose own private battle cry is 'You go through the door first! Not me! Anybody but me!' And the few exceptions to that rule (Bellatrix, Fenrir Greyback, Voldemort himself) are handicapped by being bugshit insane. So, while they can definitely boast possessing actual aggression, ruthlessness, and at least a rudimentary understanding of subversion and terror tactics, they still have their own significant shortcomings.
Numbers: Yes, its obvious, but it bears thinking about anyway. The Wizarding World simply doesn't have much population willing to actually fight. Both the Ministry of Magic, the Order of the Phoenix, and the Death Eaters spent years of time and buckets of either prestige, connections, galleons, or mix-and-match, recruiting every usable wizard they could find... and yet the Order never got above a couple dozen, and the Auror Corps never got above... well, we don't have exact #'s for either them or the Death Eaters, but from everything we saw it can't have been more than a couple hundred, each, at most.
Whereas any pissed-off muggle street gang can muster a couple dozen friends in extreme need, and if you've actually pissed off anyone official, that's it. At this point you're dealing with people who actually have armies. As in, literal armies.
And yes, numbers alone do not always win wars... there is also the question of troop quality. But we already talked about that.
Tactical Ability: This is where the Wizarding World really takes it in the pants. Because let's face it, they suck. Voldemort is one of the stupidest Evil Overlords in fiction, and yet he was the smartest motherfucker in the race for control of Wizarding Britain for many years, running rings around them all logically. Which says hideously unkind things about the rest of the contestants. Especially Dumbledore, who at the end needed bloody teenagers to do all the thinking for him as well as the fighting.
But in addition to stupidity, there is also its longtime working partner, ignorance. And even the smart wizards have buckets of that. There is no War College in the Wizarding World. There are no strategy think tanks. There are no wargames (Wizarding Chess does not count, I mean actual strategic simulations that teach at least some lessons useful to real warfare).
The Death Eaters terrified all of Wizarding Britain by discovering the concepts of basic terrorist tactics -- wear masks, threaten families, enemy strong you retreat, enemy hesitate you harass, enemy weak you attack, public intimidation works even if the target destroyed is not of actual military significance, etc. They had everybody and his squib cousin pissing their pants in fear. Twice, they brought the Wizarding government to the brink of ruin, and failed each time only due to certain flukes of metaphysics involving what happens if you try and throw an AK into Harry Potter's face.
And yet, every single tactical concept the Death Eaters discovered and used in the books, which were so horrifyingly unstoppable and outside the box to everybody else in Wizarding Britain, is basic shit any crack-dealing gangbanger thug in the Muggle World knew before he was fifteen years old. Let alone the real terrorists. I mean, seriously. The attack on the Wizarding World Cup? The Death Eater home invasions? This is not strategic genius. This is basic common sense. And yet everybody in the Wizarding World reacted like the Death Eaters were led by Alexander the Great and they were the Persians.
So, given that a contest between Muggles and Wizards must of necessity come down to asymmetric warfare, by the simple fact that Muggles outnumber Wizards by thousands to one, the question of "Which society has a better understanding of asymmetric warfare tactics?" is highly significant. And the answer is 'Muggle society. By a factor of ten zillion.' When it comes to terrorist and counter-terrorist warfare, guerrilla tactics, and military strategy, the Wizarding World is on page one of the kindergartener's introductory pamphlet, while the Muggles have not only written the book and its companion volumes but also furnished the library, staffed the university, assigned it as a term paper problem, and are currently in the process of filming the documentary series.
Which comes down to our two last questions:
Knowing the Enemy: So, we have two worlds, each with their own entirely different ways of life, entirely different mechanisms and weapons, entirely different mores and customs. Its a battle of frickin' mutual ignorance on both sides... oh, wait, its not. Why? Because there are people reasonably familiar with the Wizarding World who are exiled to the Muggle World every year... the squibs. If and when it comes to a knock-down drag-out fight between both sides, who they gonna call?
And the Muggles need to learn much less than the wizards. All they need is a basic overview of wizarding combat capabilities -- 'OK, they have the ability to Apparate, but it requires a bit of concentration. They can fire any # or kind of blasting, ripping, burning, etc, spells, but they're all direct-fire weapons and they have a max range of a couple dozen yards. They can mind control people with the Imperius, but only if they catch them first. They can shapeshift impostors, but they have to drink more polyjuice every hour... well, unless its a metamorphmagus, but they only have one and she's recognizable by her habit of tripping all over the place.' Shazam. Right there, I've at least tripled the effectiveness of my mundane soldiers and spies vs. wizards.
While for the wizards to learn what they need to fight the muggles... they'd have to join the army and be trained as muggle military officers. They'd have to learn all about muggle weapons, their use, their limitations, their capabilities. They'd have to study an overview of muggle technologies and then devote more time to brainstorming all the possible military applications of such. And they have not done any of this. And worse yet, they will not do any of this: even the pureblood wizards who *aren't* arrogant, *aren't* Muggle-haters, and in fact actually *collect Muggle trivia* are *still* hideously ignorant of how the Muggle world and Muggle technology actually works, and have made no actual efforts (such as buying and reading a Muggle high school textbook) to cure this ignorance! And yes, Arthur Weasley, Head of the Office of Misuse of Muggle Artefacts, I am looking at you.
And even the Muggleborn wizards are of no help in this context -- because they left the Muggle school system when they were 11 years old. So while they'd entirely be able to tell you about how to walk around in normal Muggle society without getting run over by a truck, or how to go into a cafe and order a meal, or maybe even use a telephone, they would be able to teach the Wizarding World absolutely nothing about how to best apply Wizarding powers to counteract Muggle armies and Muggle military weapons, because not even Hermione Granger knows a damn thing about any of the above.
So, in this war, the side that is vastly outnumbered is also vastly more ignorant of what its up against and what its opponents can do. Well, that's not good.
In this war, the only real way either side can learn about the other is through defectors. Except that no Muggle will remotely defect to the Wizarding World. Why? Because he doesn't even have basic legal rights there! OTOH, many people in the Muggle World would love to throw piles of money and hot and cold running hookers at anyone with a wand (or his squib cousin) who'd condescend to so much as teach them about what they were dealing with, let alone use his superpowers on their side.
But hey. Maybe sheer godlike power can make up for the lack of, oh, everything else, right? So at least we come to...
Firepower: The only category that the Wizards have the advantage in... at the individual level. But only at the individual level.
One fighting Wizard vs. one Muggle soldier is a notable mismatch in favor of the Wizard. The one guy can throw Unforgivables, Apparate away to safety, Disillusion himself, Transfigure various bits of the scenery to leap up and bite the other man in the donglies, etc. The Muggle soldier, on the other hand, is restricted to inflicting penetrating trauma on the other man's body.
So in a close quarters individual match, the Muggle soldier will need a significant advantage just to get in the fight at all. Such as a clear shot at the other guy's back without the other guy knowing he's there, or being out of range of the other guy's blasting hex while still within rifle range, or etc. Things he can't always rely on.
However, as we scale up the size of the fight, the wizards start getting worse and worse off, until they just aren't even in the fight at all. One wizard vs. one soldier needs a nontrivial amount of combat advantage for the soldier to win. But a squad vs. a squad is an entirely different story -- because the muggle soldiers will, almost instinctively, fight as an effective unit, while a dozen wizards are a dozen individual combatants. Not even the Order of the Phoenix or the Death Eater Inner Circle, the best and most experienced magical combatants in Wizarding Britain, ever showed even a basic awareness of ganging the fuck up on the other guy. Also, in squad-level combat, we go beyond the basic rifle and hand grenade, on up to heavy machine guns, grenade launchers, and other squad heavy weapons. But that's just the icing: the cake is that with ten wizards vs. ten muggle soldiers, there will be ten wizards trying to get in range to shoot ten different soldiers, while the soldiers are able to shoot first (having the ginormously longer-range weapons), and are concentrating all their fire on two or three wizards. And then the next two. And the next. And the next. Because while one wizard can maybe shield himself vs. one riflemen, when he's eating an entire damn volley, well, sucks to be him. And effective concentration of fire is practically spinal reflex to veteran troops, while even the most skilled fighting wizards in Britain act like they haven't even heard of the friggin' idea, let alone practiced it. Its like taking early Greeks vs. late-era Romans: the one guys believe war is all about duels between matched heroes, and the other guys are busy going 'WTF?!?' while just calmly, effectively murdering away with non-glorious volleys of missile fire.
Scale up even further. A company vs. a company. Well, the Wizards are not even in the game. For one thing, as per "numbers" above, 100 Wizards together is a significant concentration of their total available manpower... hell, the Order isn't even 100 wizards big, and the Death Eaters would have to do an almost full muster to get up that high. But how easy is it for 100 soldiers to congregate? Um, seriously, that's two platoons, not even a full company. And, of course, with this many people on the field, the odds that the wizards will all be within their fighting range (very close) to their opponents is low, while the soldiers will be within their fighting range (hundreds of yards) to every wizard. Let alone the fact that at this # of soldiers, we now have not just squad automatic weapons on the field, but armored fighting vehicles. Yes. The Humvees and the Bradleys have arrived, and, well, sucks to be you wizards.
This is before we even get into the larger scales of artillery, air support, nuclear weapons... um, what do you mean Wizarding Britain has nothing remotely comparable? Well, sucks to be them.
And, of course, I haven't even gotten into Delta Force, SAS, snipers, and the various capabilities of elite special operations units. Including things like the ability to sneak into a house full of sleeping people and murder them all without waking up the upstairs neighbors. And so forth.
Conclusion: Thanks to the existence of infallible hiding methods, such as Unplottable turf, Fidelius Charms, etc., in an all-out war between Wizards and Muggles, the Wizards would at least be able to run away and hide. But that's all they could hope to do. Their odds of winning suck ass.