Dancing along, I am in shade (8)
I believe the answer is:
'shade' is the definition.
(magnolia is a colour or shade)
'dancing along i am' is the wordplay.
'dancing' indicates an anagram.
'alongiam' anagrammed gives 'MAGNOLIA'.
'in' acts as a link.
(Other definitions for magnolia that I've seen before include "5" , "Fragrant bloom and popular paint colour" , "Tree with large scented flowers" , "purplish" , "Creamy-white colour" .)