An electron's spin creates magnetism through its intrinsic magnetic moment, which is aligned with its spin direction. In materials like iron, the outer electrons tend to align their spins, resulting in a collective magnetic moment. This alignment is a cooperative quantum effect known as ferromagnetism, where large groups of electrons synchronize their spins. The resulting magnetic fields can significantly influence the surrounding space, leading to observable magnetic properties in materials. Understanding these principles is essential for grasping the fundamentals of magnetism.