The structure, growth and bonding nature of Mgn (n=213) clusters is studied using the density-functional molecular-dynamics method and the simulated annealing technique within the local-density approximation. We find a tetrahedron and a trigonal prism as two important constituents of the structure of Mg clusters to which atoms can be added by capping the faces. Mg13 is neither an icosahedron nor a cuboctahedron. The lowest-energy structure of Mg13 that we obtained from our simulated annealing can be considered as fusion of Mg9 and Mg4 clusters. This is nearly degenerate with the relaxed hcp structure and suggests the possibility of a path for transition to hcp structure for bigger clusters. We find Mg4 and Mg10 to be the magic clusters, which is in general agreement with the predictions of the jellium model of metal clusters. However, calculations of the charge densities, the p character and the gap between the highest occupied and the lowest unoccupied states suggest the presence of mixed bonding character in Mg clusters and an oscillatory and slow convergence to bulk metallic behavior. {\textcopyright} 1991 The American Physical Society.