I try to explain this through pictures.
I wagered I knew what magical realism meant, sort of, without giving an exact definition.
For me, "magical realism" meant a realistic story containing scenes which defy the laws of physics. Things dis/appear or move as if by magic. All the other unbelievable stuff fell under the "fantasy" category in my book. Fantasy worlds, magic spells used by many; even time warps.
However, lately I've been coming across mindbending stuff tagged as "magical realism." Time warps and other impossible things. These things serve a purpose in highlighting the emotional aspects in an otherwise ordinary (ordinary as in plausible) story.
As I'm writing this post, I am now able to fathom this extended meaning of magical realism. (Mind you, still without an exact definition.) I've changed "have" into "had" in my title.
Pictures:
floating island:https://hu.pinterest.com/pin/468515167502683859/
paper boat boy:https://hu.pinterest.com/pin/468515167502684440/
giant bird:https://hu.pinterest.com/pin/468515167502683866/
breathing brain:https://hu.pinterest.com/pin/468515167502684262/