When the cover is folded back there is no magnet to hold it in place. The cover bends all the way back easily. If you hold the back of the kindle, the cover flops down. But, it you bend the cover all the way back and hold it under the kindle, the weight of the kindle holds it in place comfortably while reading and it will not flop around.
When the cover is opened like you would a book cover, it acts just like a book cover! When you fold the cover back ( behind the kindle) the magnet does not affect it. The only time the magnet comes into play at all is when you close the cover. The magnet keeps it closed. My old kindle cover for my Generation 2, had a piece of elastic to keep it closed. Now the magnet keeps it closed.
The magnet doesn't hold the cover in place from the back; it is simply a mechanism that allows your Kindle to turn itself on or off when you open or close the cover, and it keeps it held fast in front of the Kindle.