A literary mode rather than a distinguishable genre, magical realism aims to seize the paradox of the union of opposites and is characterized by two conflicting perspectives, one based on a rational view of reality and the other on the acceptance of the supernatural as prosaic reality.Magical realism differs from pure fantasy primarily because it is set in a normal, modern world with authentic descriptions of humans and society and involves the amalgamation of the real and the fantastic. It offers a world view that is not based on natural or physical laws nor objective reality, but is not separated from reality, either.
I've been using this term for a while now because I dislike "urban fantasy" as categorical heading -- a feeling that shifts to outright loathing when it tries to associate itself with stories I've written.