First of all, welcome to SE :)
Now, there's a misconception that magnets create/spend energy. They don't really. Yes, the ball did use some energy to move BUT that energy was NOT created by the magnet. Magnetism is NOT caused by some sort of 'active' energy creation scheme that goes on in the atomic level. Quite surprisingly, it's a state of artificially induced equilibrium at the level of "crystal domains". Now it's a bit difficult to go into the specific details but let's give it a try ..
Answer #1: The short story is that magnets are composed of lots of what's called "domains" which are made lots of atoms which in certain materials like iron can align their "magnetism" altogether towards a specific direction. Now in an unmagnetized piece of iron, these "domains" point their collective "magnetism" towards random directions. In essence they align in a way that's the easiest for them to maintain; which in physics we say that's it's the way that requires less energy. The following link shows an image of these unmagnetized domains as seen under a special (Kerr) microscope. The alternate colors you see in each crystal shows the orientation of those domains. Now when the material is magnetized, the domains will mostly have one color (black or white, depending on the magnetization direction) but in essence they will NOT create nor loose anything. They will simply realign themselves.
Answer #2: This is a tough one. Believe it or not, magnetism is really electrical in nature. Yes, we need to go into the quantum level to accurately explain it but if we want a more "everyday" explanation, then it's safe to say that the magnetic force in your case is really the collective attraction of unpaired moving charges at the atoms of both the magnet and the iron ball.
I can't really put it any simpler than that.