This is the activity I use to begin our study of permanent magnets. It would also be a great addition to a study of the Earth's magnetic field in an astronomy or earth science unit.
In this activity, students will explore the effects of a permanent magnet on a compass. Then using their observations they will form a hypothesis about what will happen to a magnetized needle placed on the surface tension of a plate of water. (I make a point not to use the word "floating" as that implies a lower density than water, and the needles are steel and not actually floating.)
Most compasses will react to the magnetic field of a permanent magnet from a considerable distance. If you have a large neodymium magnet, you will be able to affect compasses several feet away. Once you are working with the needles, you will find that they are very sensitive to magnetic fields as well.
I have included photos of the set up and materials. There are two versions of the lab, one with photos in the text and one without. They are both included as Word and PDF files for your use.