Magic is a part of everyday life—magical life and mundane life coexist and are not in conflict. This sub-genre tends to be more literary than Fantasy. It is a serious fiction that is a realism different than our own reality, but a realism nonetheless.
Interestingly, Magic Realism started in art, rather than literature, and has a strong association with Latin American artists. The art, and the literature, tend to be sharply detailed and starkly real—though sometimes unsettling. The term was designated in the 1940s by Cuban writer Alejo Carpentier. Scholars have argued that Magic Realism is an extension of post-colonial writing, where writers try to make sense of two distinct realities (the colonizers and the colonized). Popular modern-day fantasy authors who specialize in magic realism might be China Mieville and Neil Gaiman, though both also mix in the Mythic and New Weird subgenres too.
Magic Realism crafts a world that is at once real and contrary to our objective reality: time is often nonlinear, causality can be subjective, and the mundane and the magical coexist. Everything is mundane and everything is magical. The literature leaves readers with a feeling: disquietude, enchantment, tranquility, etc.
Low. Magic in this sub-genre is very nearly mundane—not to say that it is boring, but that it is so much a part of every day life that it is not elitist and is not fantastical.
High/Low. Magic Realism presents the magic/mundane life to underscore some aspect of life—often our relationship with the supernatural or the divine, or the existence of belief structures. Magic Realism is an exploration of some truth—it will make you think seriously, but it is not in the same single question explorative way of speculative fiction. Significantly, Magic Realism will not itself offer commentary.
Moderate. Characters are our lenses into the world and so their development is often less important than world building.
Low. Time is often nonlinear and events may seem paradoxical, which does not make for a strong plot.
Variable. Violence does not necessarily have a space in Magic Realism. However, most stories have some terrible act that can haunt the reader. Magic Realism handles violence, and other disquieting acts, in an interesting way, because resolution is not always achieved. These acts represent an imperfect world.
Slipstream/New Weird. Slipstream and Magic Realism are closely related and both have a sense of feeling to the writing (Slipstream, that feeling of strangeness).
Literary Fantasy. Magic Realism is firmly rooted in the literary traditions.
Mythic. Magic Realism sometimes might tie over into mythic fantasy.
By Gabriel Garcia Marquez. An influential and Nobel Prize winning novel that sees time as nonlinear. Magical, lyrical, Garcia Marquez is one of the literary giants of Magical Realism.
By Isabel Allende. Allende's debut novel that weaves together three generations of one family in a story of love, magic, and fate.
By Ray Bradbury. The first in a series of stories about Green Town, this is the story of one summer in a young boy's life—a magical summer where he discovers is how aliveness.
By Jo Walton. An award-winning and break-out novel, that is about good versus evil magic, about books, about self-discovery, about imagination. It is an example of an unfolding and nonlinear plot.
By Salman Rushdie. A controversial and compelling book about a world where mayhem and magic coexist and where the imagined and the actual merge.
By Ben Okri. A Booker Prize winning novel, this story is told by a spirit child who exists between the world of the living and the world of the dead, it is a story of sadness, tragedy, and love.
By Neil Gaiman. An ambitious and award-winning novel that is, at its simplest, a road story, but it is also a complex story of old gods and new, of folklore, of past selves, of culture and belief.
By Leslie Marmon Silko. This story shows us a world through other eyes and leaves readers with a feeling that the view is accurate (a world with witches).
By Jorge Luis Borges. Scholars believe this work is the beginning of the Magic Realism movement. It is a collection of stories that are fictionalized accounts of real criminals.
By Haruki Murakami. An example of Japanese Magic Realism—this novel is hypnotic and mind-bending and embodies that effortless dreaminess.