There is a whole thread on Talk Literature that attempts to distinguish between fantasy and magic realism. I believe that fantasy can be divided into three types: (1) stories that take place entirely in an imaginary world (generally one in which magic works); (2) stories in which someone from our world enters a magical realm; and (3) stories in which the supernatural takes place within a world that is recognizably our own. An obvious example of the first is The Lord of the Rings; an obvious example of the second is Alice in Wonderland. No one confuses these with magic realism. The third is more problematic. On the one hand, virtually every ghost or supernatural horror story of any kind falls into the third category. But if we isolate those stories into their own category, the stories that are left are, arguably, magic realism. This includes not only the Latin American classics like One Hundred Years of Solitude, but also "The Metamorphosis," The Street of Crocodiles, "The Nose," indeed any mainstream novel or short story that contains elements of the fantastic. Where do we draw the line?
I think that the element of social justice, colonization, persons excluded from the mainstream, etc. may be key, which is why Beloved makes the cut, but not John Fowles or Günter Grass. There are problems with this, however. It has the potential to further ghetto-ize writers who are already working from a position outside the mainstream.
In any event, it is the introduction of slave spirits and the hovering presence of the American Civil War that introduced a dimension of social injustice into Lincoln in the Bardo. I felt that this element contributed to my categorizing it as magic realism. I think that designating it as pure fantasy trivializes it. (Although I would also argue that there are many works that are clearly pure fantasy that are among the greatest works of world literature.)
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