Something incredibly marvelous just happened!
[[...all just a dream?|Dream]]
[[...a real event in the world of the story?|Real]]
If the marvelous events of your story aren’t actually happening in the characters’ world, and are only imagined situations in the characters’ heads, then your story probably counts as ''realism''.
What explained this seemingly impossible event? Was it...
[[...science or a futuristic landscape?|science]]
It might be ''science fiction.'' Science fiction uses imagined or currently impossible scientific explanations for phenomena that would not occur in our world. It is an escapist genre, although its alternate world may offer commentary on our real one.
This story may be magical realism, or it may be understood differently depending on the religious beliefs of a particular community reading the story. The genre has roots in the miracles of Catholicism, and even metaphorical understandings of religious stories could still qualify them as magical realism. Other groups may label a particular story as realism or fantasy, depending on the degree to which they feel it conveys truth about real world.
How similar is this magical world to our own?
[[Not very...extensive magic shapes the world and society into something completely different.|Fantasy]]
[[It’s an entirely realistic world, with the addition of magical occurrences|Realism]]
This sounds like ''fantasy''. Fantasy is an escapist genre that presents a world very different from our own, shaped by a constant presence of magic and supernatural forces. It requires a thorough amount of world building to fully explain to the audience all the rules and restraints of its new reality.
Is the magic a constant, fearsome threat to the characters?
It may be magical realism, but it also sounds like ''horror''. The two aren’t at all mutually exclusive, but if it seems like the story’s main intention is to provide escapist scares or thrills, rather than explore a marvelous component to real life, then horror might be the better label.
Are there familiar magical creatures, such as zombies, ghosts, or vampires?
This story could be magical realism, but just because a vampire or ghost is living in an otherwise mundane or realistic world doesn’t mean ''fantasy'' might not still be the better description. If a lot of effort or world building goes into explaining how such creatures are possible, or if the intention of the story is primarily to offer an imaginary, escapist world, then it’s probably still fantasy. But if the creatures are accepted as a natural part of the real world, and subtly used to explore real truths about it, magical realism could be a good description.
It sounds like ''magical realism'': a realistic world in which fantastical situations may naturally occur to convey deeper truths about the nature of reality. In magical realism you may encounter talking animals, characters passing easily between the worlds of the living and the dead, flying carpets or other events that defy realism. From the Something Marvelous perspective, magical realism stories always brings the marvelous to the real world.