Steven Magnet is the fan name of the creature found in part two of the "My Little Pony: Friendship is Magic" pilot. The character himself was a rather flamboyent and overdramatic sea serpent, having an over-the-top tantrum after Nightmare Moon cut off his mustache. He made such a fuss, the main six couldn't pass the river he was in until Rarity cut off her own tail to replace his mustache.
Steven Magnet's name derives from the Youtube Transcribe Audio feature. This feature attempts to subtitle the video using speech recognition software, but often fails, hilariously. During a scene with the sea serpent, Rarity exclaims "Your fabulous manicure!" which is incorrectly translated to "Steven Magnet".
Steven Magnet's real rise to fame was when there was a viewing of the first few episodes on Synchtube. Many bronies found the subtitles to be hilarious, and were chatting about them in the side bar. When "Steven Magnet" popped up, the sea serpant's name rose to fame. He soon gained quite a fanbase on 4chan's /co/ ("Steven Magnet is my favorite pony!"), and even had a few fanfictions written about him.
But Steven Magnet's most prominent role in Pony History is Ponychan's own Steven Magnet. Soon after the discovery of the Steven Magnet subtitles, somebody began to roleplay as the character on Ponychan. Ponychan's Steven Magnet gained popularity on the website due to his slighlty self-centered and hilarious banter. He is also known to make quite popular threads, ususally about the wonder and power that is Steven Magnet. Not everybody was amused by him.
Steven Magnet Knows Physics!
A brony did a physics presentation on events in MLP:FiM that ended up going viral and was covered by several major news outlets. When The Huffington Post reported on it, they mistakenly credited it to "Stephen Magnet", the name the student had given to troll them. "Steven Magnet" has been rewarded by Hasbro for his science, as he received many pony products from the company.