A ferrofluid is a liquid that reacts to magnetic fields. When a magnetic field is applied to the fluid, the particles of iron compound inside align to it. Once that happens, the fluid becomes a fluid-solid.
Ferrofluids have a lot of pretty mundane uses, from lubricating and protecting hard drives to providing heat conduction in speakers.
The ability to become solid or liquid with the application of a magnetic field also makes them perfect for computer assisted shock absorbers in Ferraris; NASA uses them for high-tech flight altitude assistance, and like a gyroscope in spacecraft. The Air Force uses their magnetic field absorbing properties to make aircraft invisible to radar.
In the above video, the ferrofluids react to a magnetic field induced by music.
L'explication complète.