1) Red blood cells actually orient themselves in a magnetic field. I came across this factoid while reading about other things and not from someone who sells magnets. So I suppose they can line up in a manner that allows them to flow more easily through small blood vessels. This would improve healing.
2) Nerve impulses are ions moving across a membrane. Ions are electrically charged atoms or molecules. Moving electrical charges experience a force perpendicular to their direction of movement when placed in a magnetic field. The stronger the field or the faster the movement, then the stronger the force. This force causes their motion to be different from the direction they would have traveled if there were no magnetic field. This may cause nerve impulses to be blocked because the ions that transmit the pain signals are not being allowed to travel straight across the membrane. The force has changed their direction of travel.