It’s common for people to confuse magical realism with fantasy, but what, I ask, after understanding their differences, would they look like combined? Combined, would it simply be medieval historical fiction with some magic thrown in or would we be dealing with a whole new genre? You may find my conclusion very interesting.
First let me briefly describe what I find to be the extreme difference between the two genres.
Magical realism uses magic to bring the reader closer to reality, while fantasy uses the same to help the reader escape from it. Magical realism, in other words, brings us closer to truth. Fantasy, by its design, takes us away from truth. This is exactly why much magical realism is considered literature and why much fantasy is not. Literature, for reasons of academic growth, urges us to think in order to understand the meanings behind things in our own real world. Fantasy, though it may provoke thoughts now and then, wants us to escape from reality for reasons of pleasure.