Hmmm…is this an independent tree that grew from seed, or is it just an offshoot…a ‘sucker’ (sucker = shoot arising from the underground part of the plant)? You need to see if the sapling is just an offshoot by pulling back some earth and determining if it is independent and grew on it’s own or whether it’s just a sucker. Suckers originating from below are unlikely to produce a desired plant and should be pruned out.
If you do have your own wee tree, you want to remove as much of the earth around it as practical and wrapped it and the rootball in burlap, using twine or wire to carefully wrap it and move it. Fall would be a good time.
The roots are likely the size of the tree top, give or take a few inches. Preserving this much root ball would be sufficient.
If you are bringing the tree to a fairly similar area, you should be fine.
All kinds of issues come to the table, as with any transplanting of a tree. You might want to read up on magnolia trees doing a simple search.
Magnolias have a very unusual root system. Unlike most other trees and shrubs, the roots are largely unbranched and rope-like. For this reason, magnolias tend to suffer more than many other trees if they are moved after they reach a large size. Most magnolias can safely be moved if the trunk is less than four inches in diameter. If you have time, sever some of the roots one year prior to moving your tree. Cut some of the roots just inside of the the rootball that you intend to dig. The roots will branch and help carry the tree through its establishment period in its new home. When you dig the tree to move it, dig a rootball as wide as you can manage; depth is less important than width since most of the roots are in the top foot of soil. Be sure to mulch your magnolia and water it frequently to keep it moist for the first season after transplanting. (http://www.usna.usda.gov/Gardens/faqs/magnoliafaq2.html)
Evergreen magnolias such as southern magnolia, Magnolia grandiflora and sweetbay magnolia, Magnolia virginiana are best planted in early spring. Deciduous magnolias can be planted in autumn or early spring. Autumn is the better time to plant in the south, while northern gardeners should opt for spring planting. Apply some mulch after planting to moderate soil temperatures and moisture conditions.