Many earthbound minerals have magnetic properties. That is, they are able to attract (pull) and repulse (push) ferromagnetic materials. The same properties can be transferred to objects made of iron, creating artificial magnets.
Bar magnets have dipoles; a separation of positive and negative charges, usually with strongest charge at the opposite ends of the bar. Positive charges attract negative charges, and vice versa.
For example, a magnetized needle placed into a magnetic field would align itself in an opposite orientation to the field. The positive end of the needle would align with the negative end of the field and the negative with the positive.
The Earth itself produces is own magnetic field, which is why we can use a compass — a magnetized needle sitting on a pivot point, to define direction. Using a compass, we can go anywhere on Earth and the magnetic poles of the compass needle will align according to the Earth’s magnetism. The point of the needle that is labeled north, under normal circumstances, will always align with the Earth’s magnetic north pole.