Fantasy, real fantasy, can be broken into three categories: (1) A story in which a person from our world enters a magic realm; (2) A story in which a person, being, or powers from a magic realm enters our world; (3) A story that takes place entirely in a magical world.
A good example of the first is Alice in Wonderland. Almost any ghost story is an example of the second. The Lord of the Rings is a celebrated example of the third.
Magic realism, in my opinion, straddles a delicate boundary between the second and third. Macondo is obviously in Colombia, but it is also somehow a magical place. On the other hand, Winter's Tale by Mark Helprin stumbles, in my opinion, by being too specifically set in New York City around the turn of the century.
Ordinarily fantasy must follow the rules that are set by the author. We know what hobbits are like. Tolkien does not betray our trust. We know we're not in the real world from the opening sentences. Steven felt that the author had broken faith with him in The Bone People because magic was introduced late without preparation.
(My patient has arrived. Perhaps I'll write more later).
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