What type of chemical reaction is represented by Mg(s) + 2HCI(aq) MgCl2(aq) + H2(g)

Both elements and compounds are chemical substances. However, there's only one type of atom in an element. In a compound, there are at least two different kinds of atoms.

For example,

[tex]\rm Mg[/tex][tex]\rm[/tex] is an element. Magnesium is the only type of atom that it contains.
[tex]\rm H_2[/tex] is also an element. Hydrogen is the only type of atom that it contains (Even though there are two hydrogen atoms in each
[tex]\rm MgCl_2[/tex] is a compound. It contains both magnesium atoms and chlorine atoms.

In a displacement reaction, an element reacts with a compound to produce another element and a different compound. In this reaction,

[tex]\rm Mg[/tex] (an element) reacts with [tex]\rm HCl[/tex] (a compound)
to produce [tex]\rm H_2[/tex] (another element) and [tex]\rm MgCl_2[/tex] (another compound).

Hence this reaction is a displacement reaction.

As a side note, this reaction matches the pattern:

[tex]\rm \underbrace{\rm \text{Reactive Metal}\; (s)}_{\text{element}} + \underbrace{\rm \text{Acid}\; (aq)}_{\text{compound}} \to \underbrace{\rm \text{Salt}\; (aq)}_{\text{another}\atop\text{compound}} + \underbrace{\rm \rm H_2\; (g)}_{\text{another}\atop\text{element}}[/tex].

In other words, if the [tex]\rm Mg\; (s)[/tex] here is replaced with a different metal that is sufficiently reactive (such as aluminum [tex]\rm Al\; (s)[/tex],) the reaction should still be a displacement reaction.