One specific instance of magical realism and/or surrealism occurs in the first sentence of Jorge Luis Borges's short story. In the opening words, Borges describes the universe, which is, in fact, a library—or, as it's punctuated in the text, the Library.
The library is an example of magical realism because it's still centered in the real world—libraries are a part of normal, everyday reality. However, Borges confers fantastical elements upon the Library by capitalizing it and conflating it with the universe. He imagines the Library to be the entire world.
There is a surrealist quality to the first statement, because the Library comes across as symbolic. One might wonder if Borges means that the Library is the universe or merely representative of the universe, what it contains, and how it's perceived.
Borges adds to the story's surrealist qualities when he says that the Library is composed of an "infinite number of hexagonal galleries." This image might strike some as bizarre or unexpected. The strange and the random is a critical part of the surrealist program.
Another specific example of magical realism and surrealism occurs when Borges describes the contents of some of the books in this mythological Library. One book—seen by the narrator's dad—contained the letters m, c, and v "perversely repeated from the first line to the last."
The book's contents relate to magical realism because it takes familiar letters of the alphabet and uses them in an uncanny way. The book can be called surreal due to the bizarreness, potential symbolism, and automated aspect of the three repeated letters.