The setup that you have just done is an electromagnet. Whenever there is an electric current it will always have an associated magnetic field. The magnetic field is originated by the movement of electrons. If the electric current flows in a straight direction, the magnetic field is practically negligible. In contrast, if the electric string is as a spiral, the magnetic effect is much stronger. Placing the iron stick inside the isolated copper spiral, it is magnetized by induction. As a result, the iron stick is magnetized and starts to attract the iron nails. In other words, it begins to work as a magnet. When we turn off the current (batteries), the effect simply disappears. Try and you will see!