Ok, here is the high level fly-by, and we can drill deeper if anyone wishes.
Iron and iron base alloys (steel) have multiple crystalline structures bases upon temperature, heat treat, alloy, and some other lessor facts. The crystalline structure of iron compounds that is magnetic is called Ferrite. When you heat Ferrite to the Curie point (temperature), the crystalline structure changes from Ferrite to Austenite. This also changes the shape and electron structures within the crystals. Austenite is NOT magnetic. hence, when you heat a magnet to the Curie temperature, it loses it magnetism.
So, why does it lose it's magnetism? Again, has to do with the electrons in the Fe (Iron) atoms, the crystalline structure, and the orientation of the spin of the atoms. When the orientation of the electron spin in the crystalline structure is aligned (through the magnetic field, ie. magnetic charging), the iron or iron alloy retains and produces a magnetic field (measured in magnetic moment, which is Newton-meters (Joules)/Teslas, basically a vector. It can also be measures as Gauss) Basically magnetism is measured by the amount of torque per Tesla
North and South poles on a magnet, can be explained in very simple terms that the electron spin alignment is 180 degrees opposite or "out of phase" for the magnetic dipole (poles).
so, to fully simplify, the electron spin orientation within the Fe crystals produces the magnetic field. Changing that crystalline structure through heat or magnetic induction, will modify the magnetic field produced. The various crystalline forms of iron are called Allotropes.
If you would like the math and more information such as specific crystalline geometry, we can continue. Remember, iron and iron alloys all have a crystalline structure. Heat treating and alloy components effect the crystalline structure and subsequently the magnetic and physical characteristics of metal.
Hope this provides a basic answer to your question. 8)
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