When the piece of unmagnetised steel interacts with the bar magnet's magnetic field, its

domain (the region within a magnetic material in which the magnetization is in a uniform

direction) will line up in the same direction as the bar magnet’s magnetic field. That causes
the steel to turn into a bar magnet with the north pole facing in the direction of the magnetic
field lines. The north pole is pulled in the direction of the field lines and the south pole is
pulled in the opposite direction. If the steel is placed beside the bar magnet, its south pole will
be pulled towards the north pole of the large magnet, and its north pole will be repelled from
it, but with a weaker force since it is further away. The end result is for the steel to be
attracted to the magnet. It will do the same in any other position alongside the bar magnet.
This way, it cannot be repelled as it will be continually attracted to the bar magnet.