Additive manufacturing (AM) has revolutionized modern manufacturing, but the application of magnesium (Mg) alloys in laser-based AM remains underexplored due to challenges such as oxidation, low boiling point, and thermal expansion, which lead to defects like porosity and cracking. This study provides a comprehensive analysis of microstructure changes in WE43 magnesium (Mg) alloy after laser surface melting (LSM), examining grain morphology, orientation, size, microsegregation, and defects under various combinations of laser power, scan speed, and spot size. Our findings reveal that variations in laser power and spot size exert a more significant influence on the depth and aspect ratio of the keyhole melt pool compared to laser scan speed. Critically, we demonstrate that laser energy density, while widely used as a quantitative metric to describe the combined effects of process parameters, exhibits significant limitations. Notable variations in melt pool depth, normalized width, and microstructure with laser energy density were observed, as reflected by low R² values. Additionally, we underscore the importance of assessing the temperature gradient across the width of the melt pool, which determines whether conduction or keyhole melting modes dominate. These modes exhibit distinct heat flow mechanisms and yield fundamentally different microstructural outcomes. Furthermore, we show that the microstructure and grain size in conduction mode exhibit a good correlation with the temperature gradient (G) and solidification rate (R). This research provides a framework for achieving localized microstructural control in LSM, providing insights to optimize process parameters for laser-based 3D printing of Mg alloys, and advancing the integration of Mg alloys into AM technologies.