The ability holder reflects the effect of all stat-lowering status moves (except for Memento), non-damaging status causing moves, entry hazards, moves like Taunt and so-on back at the user. It essentially like using an automatic Magic Coat.
Magic Bounce does not activate if used by a Pokémon with Teravolt, Turboblaze or Mold Breaker and Magic Bounce only activates once per turn. Magic Bounce cannot reflect a move just reflected by Magic Coat or Magic Bounce. If the ability holder is semi-invulnerable like using Fly, Magic Bounce will not activate.