It's a colloidal suspension of minuscule (roughly ten nanometre) magnetite particles in a liquid base. In English, that means it's magnetic liquid.
Dan's also mentions "[i]n the absence of a magnetic field, this Ferrotec EFH1 ferrofluid looks like rather runny black machine oil." When you wave a magnet around this liquid, it reacts by getting all spikey. It's still liquid, but it reacts in a way that would make you think it's a solid.
Dan's site has a 986kb MPG movie you can watch, and you can buy some for about 30 bucks at Educational Innovations Inc.
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