IANALiterary Critic, but I see a big difference in the two. That’s possibly because I was introduced to magical realism by way of a “Best Fantasy of the year” anthology right when magical realism was really hitting it big.
Major Disclaimer - the only exposure I have is aforesaid anthology and “Like Water for Chocolate”. This is based on what I percieved in those stories.
Urban Fantasy (and most other fantasy stories) tend to use fairy tale & mythical objects, creatures, and characters. Not just werewolves and vampires, but dragons, unicorns, zombies, house elves, kobolds, dwarves, the Sidhe (often by name), maenads, etc, etc.
In fantasy, magic is deliberate - usually requiring some sort of ritual or at least a conscious act of will. There’s a distinct delineation between the normals and the paranormals.
In urban fantasy, the magic is kept hidden, either through effort on the part of the paranormals, or through blinders worn by normals. In other fantasies, if magic is considered normal, the events take place in a different universe, such as Middle-Earth or Xanth.
By contrast
Magical realism does not invoke well-established fantasy tropes. You might get a ghost (more of a revenant - the personality existing after the body is dead) or a witch (but only the village wise woman/herbalist type), but none of the overtly magical races.
Magic is a normal part of life, and is generally accidental. In fact, magical events are usually not noticed by the characters as anything but an event outside their normal experience. There’s little to no acknowledgement that the event is outside the realm of what a normal person would consider possible. They are told much like folk tales - the woman who cries so much that it leaves a layer of salt thick enough to sweep up and use for seasoning is more like the Paul Bunyan story about how “it got so frigid that all spoken words froze solid afore they could be heard.”
When I was a child, I had an experience where for just a few minutes I was in a cloud of monarch butterflies. That was a magical experience, and that is what I think the “magical” in the phrase magical realism means, except turned up a notch.