I've never been quite sure what magical realism is, to be honest. It's always felt to me like people are too terrified to label their work fantasy, so they come up with a respectable euphemism.
I love magical realism when done right, but it's hard to tow the line to keep it from going
into outright fantasy and if it does slip into too fantastic then it's just fantasy (as much as I love Sarah Addison Allen, her books are still too fantastic to me, yet they're considered magical realism). Magical Realism I always found were stories where, there's this touch of hyper reality to it, things are almost surreal without being confusing. There are fantastic (or semi fantastic) things happening in a story where the rules are real world rules (IE all laws of physics still apply) yet they cannot be completely explained. They're close to being fantastic but nothing is as straight forward or happen in a way that cannot be sort of guessed or explained.
I will say though the genre seems to be on the rise
. I've certainly seen more and more in the genre pop up. Though again some tow the line as being too fantasitc but not fantastic
enough to be called straight up fantasy. For a movie example, I guess "The Legend Bagger Vance" is considered magical realism or "Big Fish". I see it more in movies then I do books.