Magnetizing conforming clothes make it fit a little better without the annoying pokethroughs.  If conforming works right out the box then you may not need to magnetize.  However, if pokethroughs ensue after conforming, applying the magnetize feature will make the conform clothing fit better. 

Magnetize does not work on dynamic clothing.  This type of clothing is only applied in the Cloth Room where you run a multi-frame simulation to dress your figure.  Think of it as dropping a sheet on a person; the sheet takes on the form of the posed figure.