History
After World War II, geologists developed methods for measuring movements in the earth's magnetic pole. In the late 1960s archaeologists began to use these techniques for dating. There are two kinds of magnetic dating.
Paleomagnetism
Paleomagnetism is magnetic dating based upon the reversal of the earth's magnetic poles; this has occurred in irregular intervals every 100,000 years or so. A sample is compare to a master list of the magnetic pole situations throughout the eons to determine its age.
Archaeomagnetism
The other kind of magnetic dating, archaeomagnetism, is possible because the position of the magnetic north pole is not stable and moves around. If a clay object is heated to a hot enough temperature, the iron inside it will preserve the position of the pole at that moment. This frozen, magnetic information is used to date the object.
Significance
While other forms of dating are based around the decay of a particle, such as carbon-dating based around the decay of carbon, magnetic dating allows archaeologists to figure out the age of more varied and older artifacts.