Ferrofluid is probably one of the strangest materials known. Ferrofluid is a solution which becomes strongly magnetized in the presence of a magnetic field. The solution behaves not only as a liquid but behaves as a metal as well. In order to explain this phenomena we have to look at the composition.
Ferrofluid is composed of magnetic particles suspended in a liquid solution. These magnetic particles are about half the size of a ribosome in a cell (really really small) and are encased in a carrier fluid (usually water). Without a magnetic field the solution has no net magnetization but as soon as a magnetic field is brought near it the particles in the solution orient themselves to their magnetic field lines. Essentially the magnetic fields repel the particles in the solution while gravity and surface tension keep them from splashing everywhere.
So just what are ferrofluids used for? Well there are plenty of uses for it such as in engineering and medicine. With regards to engineering ferrofluids are able to reduce friction and resistance between magnets. Ferrofluids are also being used to detect cancer and possibly as a cure due to its ability to transfer and give off heat. This material is still relatively new so it seems only time will show the other uses of this unique solution.