Why do lattice structures form into powders?
This is simply because the combustion of magnesium doesn't occur orderly enough to create one big solid block of magnesium oxide.

When magnesium reacts with air, the way of formation of the oxide lies at the mercy of the chaotic motion of oxygen due to it's entropy in the air. Often, the molecules react simultaneously at various locations in the air around the part of the ribbon undergoing combustion, creating several micro-crystals, which fall down due to gravity on reaching a certain weight. These micro-crystals appear as powder in the macroscopic scale.