Two questions:

1) How old are these kids? (To be asked to think of magnets this way. Modern use of magnets and magnetism is in electricity generation, magnetic resonant imaging -MRI, nuclear waste reprocessing,...)

2) What wrong with using the Sun or landmarks to tell directions? Once children learn the "geography" of their environment, they would not even need "directions". Geography gives much easier reference (way)points than compass(points) in most simple circumstances.