What's ferrofluid? "A ferrofluid (from the Latin ferrum, meaning iron) is a liquid which becomes strongly polarized in the presence of a magnetic field. It is a colloidal mixture comprising extremely small magnetic particles suspended in a synthetic oil. The particles are coated with a soap or detergent to prevent them from clumping together." -- Wikipedia entry on Ferrofluid

Where can I get some? United nuclear sells it on their chemicals page (search for MagnaView). You can also make it yourself

What can you do with it? There are various practical applications, but even more importantly, various awesome applications. Check out YouTube for a variety of videos.