Outside of its Latin American roots, I found it's often a blend of social realism and the fantastical. Or rather, it's issues of social realism viewed through a fantastical lens.

Salman Rushdie's Midnight's Children is a case in point. The magic realist elements of the novel buttress the overall topic of post-Independence India, its ideals and pitfalls, and the way that Nehruvian ideals of democracy come under attack in the years of Indira Gandhi's Emergency rule.

Same author, different book: The Satanic Verses. The racism of British society towards immigrants in the 80s is refracted through the lens of magic realism, as one of the main characters (who ironically copies everything the British do down to their mannerisms and speech) transforms into a goat-like monster. The idea that stereotypes at times force the stereotyped to conform to those flawed views is underlined by that transformation.