-Starting from Maxwell's equations, we derive a sensor model for three-axis magnetometers suitable for localization and tracking applications. The model depends on the relative position between the sensor and the target, and a physical magnetic multipole model of the target. Both point targets (far-field) and extended target (near-field) models are provided. The models are validated on data taken from various road vehicles. The suitability of magnetometers for tracking is analyzed in terms of local observability and Cramér Rao lower bound as a function of the sensor positions in a two sensor scenario. Results from field test data indicate excellent tracking of position and velocity of the target, as well as identification of the magnetic target model suitable for target classification.