In contemporary research within physics and materials science, smart materials play a crucial role. Magnetic fluids, characterized by high magnetization, low viscosity, and longterm stability, are a type of smart material with significant industrial applications. This paper specifically explores the mechanism behind the formation of magnetic chain structures in magnetic fluids and their impact on the properties of these fluids. The study reveals that the formation of magnetic chain structures not only affects the magnetic and rheological properties of magnetic fluids but also has a crucial impact on their applications in magnetic fluid sealing, damping, and sensors. The research conducted in this paper serves as a reference for a deeper understanding of the mechanism and properties of magnetic chain structures in magnetic fluids. Future studies could further investigate the applications of magnetic chain structures and explore methods to mitigate inconveniences associated with chainlike structures, thereby expanding their applications across different domains.