The story 'The Nose' by Nikolai Gogol is categorized as magical realism due to its incorporation of fantastical elements, such as a detached nose that behaves as if it has its own life. This blending of the absurd with a realistic setting is a hallmark of the magical realism genre. Additionally, Gogol's use of a journalistic style enhances the story's realism, making the bizarre events seem more plausible within the context of the narrative. While elements of romance, diary, and gothic genres may be present, they do not capture the essence of the story as effectively as magical realism does, which uniquely combines the ordinary with the extraordinary.