For the purposes of ELI5, magnetism occurs when the atoms inside your material are all aligned in the same direction (imagine a bunch of tiny magnets all aligned N-S in perfect unison).
When we melt the iron and nickel down to make steel (along with anything else getting mixed in), we run into 2 issues for magnetism:
1. Adding that much heat will cause all the atoms to jiggle around a lot more which throws them out of alignment. If you make the atoms hot enough, they permanently fall out of alignment. We call that point the Curie Temperature – the temp at which natural magnets lose their magnetism.
2. Even if the iron stays in alignment, you now have a bunch of atoms all mixed throughout the iron which means that whatever was all previously aligned is now spaced way out by other atoms so it’s “less dense” in a sense. This drop in “magnetic density” makes the magnet effects vanish.
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