The first magnetic phenomenon observed were those associated with naturally occurring magnets, fragments of iron ore found near the ancient city of Magnesia. These attracted unmagnetised iron. The attraction was maximum at certain regions of the magnet called the poles.
The Chinese have known to use Magnetic needles for navigation on ships. Since then, the magnetic materials have been playing an increasingly important role in our lives. It's therefore necessary to understand the structure of such material.
The ordinary magnetic effects in materials are determined by atomic magnetism. On continuing to cut a magnet into its smallest bit, we reach the level of a single atom. This is a tiny current loop in which the current corresponds to the circulation of the electrons in the atom. To this atomic current we associate a magnetic dipole moment. This tiny bit cannot be further divided and hence the dipole is the smallest fundamental unit of magnetism.
A magnetic material can be regarded as a collection of magnetic dipole moments, each with a north and a south pole. Microscopically, each dipole is actually a current loop that cannot be split into individual poles.