The short answer is that scientists are still unsure how they work once you get down to the sub-atomic level of quantum physics. For a great layman's description of the subject, I've just finished reading the book, The Grand Design by Stephen Hawking and Leonard Mlodinow.
But here is a casual description by one of my all time favorite scientists, Richard Feynman, describing it in a manner only he can do...
This doesn't make the Insane Clown Posse any less idiots because scientist know perfectly well how magnets work on an atomic level... But they may have unwittingly brought up a subject that scientists are still grappling with when you get down to the sub-atomic quantum level.
Thanks to Unreasonable Faith blog for the link.