Yoshiman,
I'll try to keep it simple, but my apologies if i fail! And i hope you're not just looking for an easy answer to an FIs question!?!
When I switch to the right, does that mean the left mag is not working?
Yes - with "Left" selected, the right mag is isolated, and vice-versa.
Also can someone explain how they work
When a magnet spins in a coil, it induces a current. The magneto is a just that - a magnet spinning, driven by the engine, in a coil, thus inducing a current. That current is then fed to the spark plugs in each cylinder to give ignition.
if they fail why the engine stops?
Most piston engines have 2 mags. This gives redundancy. Each mag will feed one spark plug in each cylinder. So, if one mag fails, there should be at least one spark plug still functioning in each cylinder.
However, in the unlikely event that you lose both mags, there will be no spark in the cylinders, thus no ignition and no power!
Hope this helps - its brief but if you need more detail, let me know.
Uncle G
