What is his theory on Magical Realism?I would like a brief summary that explains the theory

Magical realism isn't really a theory, but it's a method
(or way) of writing.  The term magic realism, originally
applied in the 1920s to a school of painters but was later applied to prose fiction. 
These writers interweave, in an ever-shifting pattern, a sharply etched realism in
representing ordinary events and descriptive details together with fantastic and
dreamlike elements, as well as with materials derived from myth and fairy
tales.

The novels (and their authors) violate, in various
ways, standard novelistic expectations by drastic -- and sometimes highly effective --
experiments with subject matter, form, style, temporal sequence, and fusions of the
everyday, the fantastic, the mythical, and the nightmarish, in renderings that blur
traditional distinctions between what is serious or trivial, horrible or ludicrous,
tragic or comic.

Probably the best known magical realist
authors are Gabriel Garcia Marquez and Jorge Luis Borges (Salman Rushdie plays a part,
too).  The authors work the frame (or surface) of their novels/short stories to seem
conventionally realistic, but then add contrasting elements like myth, dream, fantasy or
the supernatural to invade the realism and change the
frame. 

There are four key components to this (taken from
my lecture notes):

1. Converting the
   mundane


2. Introduce unusual events (For example, Garcia
   Marquez typically suggests that something will happen before it
   happens)


3. Creation of myths from
   history


4. Extrapolations from
   reality

I'm not sure what you're reading, but I
like to use "A Very Old Man With Enormous Rings" and "The Handsomest Drowned Man in the
World" as in-class examples.