Magnets are solid objects of stone, metal, or other material, which have the property of attracting iron-containing materials. This attracting property is either natural, as in the case of lodestone, or induced (formed by unnatural means).
All objects are made up of tiny particles called atoms. Atoms are composed of several different particles, including tiny negatively charged electrons that rotate around the atom nucleus. The electrons in the atoms of magnetic objects are all, or nearly all, spinning in the same direction around the nucleus. This is what causes an object to be magnetic, or, attracted to magnets. In each magnetic object there are many different groups of atoms, each forming its own mini-magnet, but these groups are in opposing directions to each other. In a magnet, these groups of atoms are aligned so that the mini-magnets are all pointing in the same direction. The term for this is polarity. This alignment of the groups of atoms is what makes an object a magnet.
What kind of material sticks to magnets? Ferromagnetic objects, containing iron, cobalt, or nickel, do. For younger children, consider going on a 'magnet hunt'. Give them a magnet (a horseshoe or bar magnet will work well, if you have one), and have them try to 'capture' other objects, using the magnet. For example, they might experiment on paper clips, coins, an eraser, nails, aluminum foil, a plastic pen, and a pencil. It is important to understand that not all metal is magnetic (the foil, for example), and some objects are only partially made with magnetic materials.
All magnets have both a north and south pole due to the alignment of their groups of atoms. Opposite poles attract one another, same poles repel one another. This means that if the north pole of a magnet faces the south pole of another magnet, they stick together, or attract. However, if you hold the north pole of a magnet to the north pole of another magnet, they push away from, or repel, each other. You can demonstrate this with two magnets that have their poles marked. No matter how hard you try to force two same poles together, they will push away. However, if you flip one of the magnets around so that opposite poles now face each other, the two magnets will attract each other and come right together.
The north pole of a magnet points approximately toward the geographical North Pole of Earth, to a location called the Magnetic North Pole situated in Northern Canada. The exact location is gradually shifting as the Earth's magnetic field shifts. The Magnetic North Pole works as a south pole because it attracts the north pole of magnets.
You may want to explain to your children that magnetic compasses use magnetized needles. The first compasses were lodestones — magnetite stone that has polarity. The Chinese were apparently the first group of people to use lodestone as compasses; they began to make them around 1000 AD. The earliest compasses were merely a lodestone placed in a dish of water, so that the north pole of the lodestone could swivel to point North. By 1500, magnetic compasses were widely used by Europeans as well, making the navigation required for Columbus and Magellan's famous voyages possible.