Good morning Aniket,
I will try to answer both your posts together here. You should really ask a mod to combine them.
A fluid element is another word for the same concept as particle in dynamics or mechanics.
That is it is small enough for all the mass or other property of interest to be considered concentrated at one point. Then we can integrate this property over a volume by summing it for all the elements - possibly numerically possibly by formula if we can find one.
It's dimensions are non zero but small enough for its internal structure to be unimportant to the problem in hand.
As regards frames of reference; two are used in fluid mechanics.
We can use absolute coordinates by setting an XYZ coordinate system and tracking the progress of a given fluid elelement. For example an element that enters a pipe, passes down the pipe and exits the other end with the pipe axis aligned in the x direction. In your case the pipe will have magnetic walls of course. Such analyses use streamlines or streamtubes and produce global results for the overall fluid. Global analysis equations are characterised by partial derivatives with respect to the global XYZand time axes.
This however is of little help in calculating local effects so we also employ a local coordinate system, based on the individual fluid element. We call this method of analysis 'following the fluid' and the derivatives are given special symbols (capital D) to mark the difference.
So if f(x,y,z,t) is a function of interest, say density or a component velocity, then the rate of change of this quantity at a fixed point in space as the fluid flows past (a succession of different element) is ∂f/∂t.
If, however we want to know what happens to a particular fluid element we take the rate of change 'following the fluid'
\frac{{Df}}{{Dt}} = \frac{d}{{dt}}f\left\{ {x(t),y(t),z(t),t} \right\}
Where dx/dt = u, dy/dt = v, dz/dt = w are the components of the local velocity vector u
Since by chain rule
\begin{array}{l}<br />
\frac{{Df}}{{Dt}} = \frac{{\partial f}}{{\partial x}}\frac{{dx}}{{dt}} + \frac{{\partial f}}{{\partial y}}\frac{{dy}}{{dt}} + \frac{{\partial f}}{{\partial z}}\frac{{dz}}{{dt}} + \frac{{\partial f}}{{\partial t}} \\ <br />
\frac{{Df}}{{Dt}} = \frac{{\partial f}}{{\partial t}} + u\frac{{\partial f}}{{\partial x}} + v\frac{{\partial f}}{{\partial y}} + w\frac{{\partial f}}{{\partial z}} = \frac{{\partial f}}{{\partial t}} + ({\bf{u}}.\nabla )f \\ <br />
\end{array}
This is your convective derivative.
Does this help?