A prefix is a part of a etymology that modifies are word at the start of it: i.e. reconsider, involuntary, uncover.
A suffix is the same thing but it modifies the end of a word: i.e. walked, bigger, reversible.
De is a prefix meaning "down, away" or "denoting removal or reversal". In this case it is referring to demagnetizing something, or removing the magnetization.
Ize is a suffix meaning to "make or become". This is referring to an object becoming magnetized.
The first sentence about Siamese cats is correct because the hypens are correctly placed where you pause when reading. The other answers have misplaced the hypens and they aren't in the appropriate place for pausing.
