Loki did not expect Thor to recognize him as he was. He was not certain why he did not expect it - surely he had not changed so much with age as to be unrecognizable to someone who spent a great deal of time near him - but he was still a little taken aback when Thor simply grinned and hugged him as though this was absolutely normal. Thor's ability to simply be, no matter the situation, would never cease to be an enviable trait. Loki could adapt, trick his way into the appearance of confidence and comfort, but that was never the same thing. He did not retreat from the unexpected embrace, but remained still.
"This is no magic; I am from another time." A worse time, he pointedly did not add. He would not trouble Thor with that now - not at all would be preferable, but given the fictional nature of their world, and the popularity of that fiction... it was unlikely Thor would not eventually see something that would lead him to at least ask questions, if not simply find the information for himself.
"I have hidden us from their view. This place is complicated, and attracting unwanted attention will only make matters more difficult." Without seeming to move, Loki reached into the space between spaces, plucking up an item from the void there, and then opened his hand to offer Thor an amulet. "Here. Wear this. It will protect you - there are creatures in this world who have a fondness for possessing the bodies of their victims. This seems to keep them at bay."