I took the opportunity to enter the relevant portion from Eshbach, Handbook of Engineering Fundamentals , Third Edition dealing with Magnets and Magnetism as a foundation and as a starting point in our activity here. As I am not a physicist (I see we have one on the board though) I am venturing outside my core field of expertise when it comes to 'things' on the atomic level.
So let's proceed with 'some background material' and take a look at magnetism on the atomic level via the 1-minute world tour given in Eshbach:
ELECTROKINETICS AND THE MAGNETIC CIRCUIT 9. Magnets and magnetism
Magnetic Field of Force.
Any region in which a magnetic substance (e.g., a piece of soft iron), when placed therein, becomes magnetized is said to be a magnetic field. A magnetic field exists in and around every magnetized substance and around every electric current. The direction of the magnetic field at any point P is arbitrarily chosen as the direction in which a small magnetic needle point would point when placed at P without disturbing appreciably the existing conditions.Ferromagnetism.
Much of the contemporary theory of ferromagnetism is based on spectrum analysis and interpreted by the Bohr-Sommerfeld atomic model and it's modifications. Specifically the elementary magnetic particle is the so-called "spinning" electron.The model of the atom used to account for the elementary magnetic effect requires that the electron spin about an axis passing through its center, as distinguished from the rotation in circular or elliptical orbits around the atomic nucleus. In this manner each orbital electron has a magnetic momentum due to its moving electrical charge and an angular momentum due to its moving mass.
Uncompensated Spins.
It is assumed that all such orbital electrons spin, but that in general, at any given particular energy level or shell within the atom, all electrons may be deivided into two equal groups - those that spin in one direction and those that spin in the opposite direction, this producing a null magnetic effeect.This effect is known as compensated electron spins. In certain elements, however, it is consistent with all the theory to believe that uncompensated electron spins occur in one or more shells. In other words, there are, for example, more electrons spinning in one direction than in the other, in a givenshell. These excess or uncompensated electron spins are an important factor in the phenomena of ferromagnetism.
Exchange.
Fundamentally, ferromagnetism consists of the reorientation of the magnetic moments of the uncompensated electron spins due to the magnetizing force of an externally applied magnetic field.Although this accounts for the major ferromagnetic properties of the elements such as iron, cobalt,nickel, it fails to account for the abscence of such ferromagnetic properties in other elements also known to have uncompensated electron spins.
This apperent discrepency is removed when the so-called exchange forces are considered.
For an element to exhibit ferromagnetic properties it is required that, in addition to the existence of uncompensated electron spins, these spins musts be parallel in contiguous atoms. Were this not the case the magnetic moments of individual atoms would be random in direction and hence the resultant magnetic moment of an appreciable region within the substance would be nil.
It has been found that a certain ratio must exist between the diameter of an atom and the diameter of an electron shell that has uncompensated spins in order to permit the alignment of magnetic moments in contiguous atoms. This ratio is necessary because the electron spins and charges influence each other, dependent upon the distance between them.
This influence, which is known as the exchange, must have a proper value in order that the uncompensated spins can be aligned to produce ferromagnetic effects. These forces of exchange tend to keep the spins in neighboring atoms while the forces of thermal agitation tend to destroy this alignment.
When the temperature of the substance becomes great enough the forces of exchange are completely overcome and the substance loses it's ferromagnetic properties. The temperature at which this occurs is the well-known Curie point. According to the theory, the magnetic saturation depends both on the uncompensated electron spins and the exchange. Rough approximation makes the saturation point a function of the product of the number of uncompensated electron spins and the exchange.
Domain.
In ferromagnetic substances the forces of exchange are sufficiently large so that the uncompensated electron spins in the neighboring atoms are more stable when their mgnetic moments are parallel then under any other orientation, even when no external magnetic field is applied. However, this situation hold true only over very small regions in the given specimen of the substance.These regions, which are called "domains", have been found to experiementally to have the volume equivalent to a cube approximately 1/1000 inch on an edge. Ferromagnetic substances are completely divided into such domains, each domain being magnetized to saturation in a definite direction. Any specimen of a ferromagnetic substance is said to be unmagnetized when the directions of magnetization of the individually magnetically saturated domains are oriented at random with respect to each other. Thus, the application of an external magnetic field tends to reorient the individually magneticall saturated domains in the direction of this applied field.
Crystal Structure.
X-ray analysis has shown that most materials are of crystalline structure. In teh case of ferromagnetic substances these crystals are too small to be seen individually. However, their properties have been studied by means of specrum analysis and microphotography. Owing to the crystalline structure there is in general more than one axis of stable magnetic saturation. In the cubic crystal charachteristic of iron there are six equally stable axes of magnetic saturation.