1How do magnets actually work?
Before I try to answer, let's acknowledge that every answer not in terms of graduate-level physics is going to involve a certain amount of hand-waving. There's a very entertaining video of the legendary Richard Feynman explaining that he can't explain it to you in terms of what you already know, and I am not under the illusion of having exceeded Dr. Feynman in my explanatory prowess. So, at some level, I will always disappoint the Juggalos out there. But here's my best shot at it:
When electricity moves, it leaves electric and magnetic fields in its wake. Since every electron is spinning, that means it creates a magnetic field. In most atoms, the electrons pair off so their spin cancels out. In iron, they space out so that their spins don't automatically cancel out. When a magnetic field gets applied, it can get all of those spins to point the same way, making a magnet. A permanent magnet locks all of those spins in once you get them organized.
I have absolutely glossed over a bunch of fascinating concepts like Maxwell's Equations, Schrödinger's Wave Equation, and orbital hybridization because it's outside the scope of an FAQ, but that's as honest an answer as I can give without "cheating you," as Dr. Feynman described it.
Short version: Magnets are weird, but also useful. Like me.