This is not the first magnetic toy to be banned for this reason. There was a construction toy
that used strong magnets as their assembly mechanism, but the pieces could be damaged in a way that caused the magnets to escape. There was at least one rather nasty death and a bunch of emergency hospital visits when small children swallowed the magnets (one isn't a problem, but two in the gut tend to want to snap together, pinching closed or tearing through whatever intestines might be in between -- and as the picture in this story
shows, kids can swallow a lot more than two. I know: where are the parents. But it probably doesn't help that the buckeyballs look an awful lot like candy).
(BTW, when the Feds "file suit" like this it just means they're applying civil rather than criminal law, which is appropriate since I don't think anyone thinks there was any kind of bad intent or even willful negligence that would require criminal charges)