What is magical realism?

Birds by Steven Kenny
Magical realism is writing that is grounded in the real. 

The mode does not generate fantastical or alternative worlds. The mode’s authenticity as a tool of cultural criticism emerges from its grounding in the real. ‘[…] Magical realism may be considered an extension of realism in its concern with the nature of reality and its representation, at the same time it resists the basic assumptions of post-enlightenment rationalism and literary realism’ (Zamora & Faris 1995:6). 

Apparent in the work of magical realist writing throughout the world, especially places of political upheaval and oppression, is the displacement of realism, and by extension reality, through a process of defamiliarisation. Magical realists are those who ‘…attempt to capture what is strange and marvellous about ordinary life’ (Chamberlain 1986:14) both within the world of fiction and the world that is our day-to-day waking reality, in an attempt to ‘underline once again to what extent the perception of “reality” actually depends on pre-existing categories’ (Hegerfeldt 2002:77). 
George Tooker

Magical realism, ‘…highlights that reality is not merely a given over which there will exist a natural and universal consensus, but that what individuals and groups will think of as ‘reality’ depends to not an inconsiderable extent of social and cultural factors, causing expectations and assumptions about the world to differ with time and place’ (ibid). 

Magical realism is as its very name attests, a paradoxical form accommodating both the mundane and the extraordinary as equally valid.