There's no "grit", at least not like a diamond steel has, but rather thin lines of metal that run from end to end.

Victorinox Swiss Classic 10-Inch Honing Steel

Victorinox Swiss Classic 10-Inch Honing Steel

Q: Will this work with a karambit?

It may be awkward. Remember the steel is ment to maintain the sharpness of the knife. It is not for actually sharpening the utensil.

Q: Is the steel magnetized?

The entire steel is magnetized, and the magnetic effect continues to within 2" of the end of the handle (that is, it turns paper clips on a wooden table). It picks up paper clips, as another answer says. I can feel it tugging on a normal desk size scissors blade but it's not strong enough to lift it.