At first it expands, because it is full of air, and the air expands But it is porous, so the air eventually escapes, and then the marshmallow just melts, and gets all gooey, because sugar has a very low melting point. Also, marshmallows have gelatin, which also melts easily. They turn black when you catch them on fire, because that is also the sugar burning. If you burn sugar in a spoon over an open flame, it will also melt, boil, and eventually get black. That's the carbon left over!

Most objects expand on heating, but usually solids expand less than liquids, and both expand much less than gases, which expand a lot. Fill a balloon with air and put in the refrigerator. It will shrink down when it has cooled. Take it out and it will swell up again.

Marshmallows are solids, but they contain lots of air, and it is the air that expands so the Marshmallow swells up.

If you rip open a marshmallow and look at it with a magnifying glass, you can see that it has a lot of little holes in it. Each of these holes is filled with air. When you put the marshmallow in the microwave, you cause the air in each hole to heat up. Hotter air pushes outward with more pressure, so it pushes on the walls of the holes and the holes expand --especially because the heating also makes the marshmallow material softer and stretchier. This process is similar to blowing air into a soap bubble.