Well, Gabriel Garcia Marquez is certainly a master of the use of magic realism in his fiction, so he should know! I guess what he is trying to get at though is how magic realism has really developed as a backlash against the political repression and tyranny in Latin America. Magic realism as a literary style combines incredible events with realistic details and relates them all in a matter-of-fact tone, without highlighting the often ludicrous "magic" that the author refers to. It is a style that emerged from Latin America in the middle of the 20th Century and has now spread to be used by other authors worldwide, such as Salman Rushdie. The impact of juxtaposing impossible events with every day reality is to blur the boundary between reality and unreality, arguing for a wider definition of what we refer to as "reality" through its incorporation of myth, legends and archetypes.
As it emerged as a literary style during a time of great political oppression, some critics argue that literature became a force of social protest and magic realism was used to imagine a different world where strict notions of "reality" are exploded and nothing can be taken for granted. Hope is therefore possible in such a world, no matter how harsh the oppression. I think the quote that Marquez makes is an exaggeration - it clearly points to the importance of magic realism in the literary canon of South America, but I think there is space for the recognition of other forms of realism.