When steel is magnetized, its internal structure undergoes a realignment of magnetic domains. These domains, which are small regions where atomic magnetic moments are aligned in the same direction, become oriented in the direction of the applied magnetic field. As a result, the overall magnetic moment of the steel increases, leading to a net magnetization. This change is typically reversible, and when the magnetic field is removed, the domains may return to their original random orientations, partially or entirely demagnetizing the material.
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