I think H becomes a gas (H2) and Mg now has an oxidation # of 2+. I only think that after talking to lab instructor about other reactions. How do you know what happens if it is just a written reaction and not something you see happen?
Um, well, there's not hydrogen gas mentioned in the reaction. And I know because I saw it happen once (well more than once )
How to know it? There are specific trends in reactions and you can often identify them once you get to know that trend. For example, metals react with oxygen will produce a metal oxide, unless they are not reactive enough.
Also, that's correct: Mg now has an oxidation # of 2+. You just need to know what is the compound which is the result of the reaction.