Nanotechnology has opened new doors of exploration, particularly in materials science and healthcare. Magnetic nanoparticles (MNP), the tiny magnets, because of their various properties, have the potential to bring about radical changes in the field of medicine. The distinctive surface chemistry, nontoxicity, biocompatibility, and, in particular, the inducible magnetic moment of magnetic materials has attracted a great deal of interest in morphological structures from a variety of scientific domains. This review presents a concise overview of MNPs and their crucial properties and synthesis routes. It also aims to highlight the continuous synthesis methods available for MNP production. In recent years, the use of computational methods for understanding the behavior of nanoparticles has been on the rise. Thus, we also discuss the numerical models developed to understand how magnetic nanoparticles can be used in magnetic hyperthermia and targeting the Circle of Wilis. With the increasing use of MNPs in biomedical applications, it becomes necessary to understand the mechanisms of toxicity, which are elucidated in this review. The review focuses on the biomedical applications of MNPs in drug delivery, theranostics, and MRI contrasting agents. We anticipate that this article will broaden the perspective on magnetic nanoparticles and help to understand their functionality and applicability better.