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[* black] We already took apart the iPad during the teardown, so here's a peek of all the fun stuff from the inside...
[* red] The sleep sensor. This is the little sensor that reacts to the Smart Cover's round magnet for turning on/off the iPad 2's screen.
-[* yellow] Row of magnets.
+[* yellow] This row of magnets clamps the Smart Cover tightly to the iPad 2 (on the right side). Note that the magnets have their polarity displayed, and that they alternate in polarity: + - + - .