Let us begin by reminding ourselves what a definition of magic realism actually is before going on to examine this excellent postcolonial classic. Magic realism is a literary style that combines incredible events with realistic details and presents them in a tone that seems to suggest credibility. This interlacing of fantastical events with the mundane was pioneered in Latin America. Generally, magic realism blends real and fantastic, incorporating magic, myth and imagination into its genre, seeking to redefine what constitutes reality.
Now, having given ourselves a working definition of the term, let us now examine Midnight's Children. It is clear that Rushdie incorporates "real" and "unreal" elements, drawing on mythology, and, some critics argue, "remythologising" India in the process. We can see this is evident from the beginning of the novel, which focuses on the Independence of India. However, immediately, this very real and political event is juxtaposed with the midnight's children, who are gifted with magical powers.
This is what makes this novel so attractive and such a gripping read. Rushdie seems to offer comment on real political events but through flights of fantasy that seem to draw on various myths and legend. Equally, you might want to consider the role of the central protagonist, Saleem, who is presented in such a way as to undermine his credibility. He is unattractive and foolish, and yet he is the central way in which Rushdie offers serious political commentary on the postcolonial nature of India. Again and again, the absurd and ludicrous is matched with the deathly serioius.