Exchange due to Pauli exclusion tends to align magnetic moments parallel to each other in a ferromagnet whereas interaction with crystalline fields via spin orbit coupling leads to a preferential orientation of the magnetization along particular directions. This behaviour is often described in terms of effective exchange and anisotropy fields acting on a position dependent magnetization vector. The concept of domains was originally introduced by Weiss to explain why ferromagnetic materials can have zero average magnetization while still having a non zero local magnetization. The essential idea is that alternating the direction of the magnetization with respect to a surface canminimize the energy in the static magnetic fields associated withthe magnetization in a finite material.

The transition from one direction of magnetization to another between adjacent domains involves a rotation of the magnetization vector. The rotation occurs over a finite distance whose width is determined by a competition between exchange and anisotropy. The resulting magnetic structure is called a domain wall. When a magnetic field is applied, domains with the magnetization oriented along the applied field direction grow by displacement of the walls at the expense of domains with the magnetization oriented opposite to the field direction.

The deviations of the magnetization from uniform inside the domain wall incorporates exchange, anisotropy and dipolar energies, so that the formation of the wall is energetically costly. The ground state of an infinite bulk material therefore would be the homogeneously magnetized single domain state. However, real materials have finite boundaries, which involve at some point or another a discontinuity in the magnetization and with this magnetic surface charges giving rise to shape demagnetization fields. It is the tendency to reduce these surface demagnetization fields (pole avoidance principle) which finally give rise to the formation of domains, where the reduction in demagnetization energy and the cost of wall energy are balanced against each other.