Magneto has set up shop on an island in the Bermuda Triangle that he's caused to be risen from the depths, and has taken Cyclops (Scott Summers), who has temporarily taken up being a fisherman, and his captain (Lee Forrester, who is a romantic interest for him) prisoner after they were shipwrecked.
Magneto tries to blackmail all the world's leaders (we get a nice selection here - Reagan, Thatcher, Brezhnev, Deng, King Abdul, and Moi) into making him King of the World. He wants to scrap the world defence budget (which he says is trillions - in real life that'd be a massive overestimate in 1981 - it's not even 2 trillion today. maybe he's including the Sentinels). Instead, he will lead H. sapiens to a glorious golden age, planning to eliminate "hunger, disease, poverty", damn the cost (hmm!), and providing Bobby Kennedy with a retort. He chews the fat with Scott, catches up on the news about Jean, expresses his sympathy, reveals that he has an inhibitor field which is shutting off Scott's optic blasts, casually destroys some nuclear warheads that have been launched at the island, destroys the Soviet submarine that had launched them, opens up a volcano in a fictional place out of Doctor Zhivago and threatens to do the same in Moscow.
The X-Men have finally got their finger out and started looking for Scott - they've tracked him and Lee to a shipwreck in the Bermuda Triangle and are looking for it alongside Dr. Corbeau (the X-Men's go-to man if they need a boat, it seems, as well as being the official provider of space shuttles), and a random Ms. Marvel (Carol Danvers), who might as well not be in this issue (except that she provides our first indication that Wolverine has a long and distinguished past in the superhero community - as he confirms that he used to work with her on special ops stuff).
We then get to the punching bit. They have to take down Magneto powerless, due to the inhibitor (which affects non-anatomy related powers - Kurt is still blue and has a tail, but can't 'port, Logan's claws still work but his senses are gone, and Peter shifts out of his steel form entering the zone). Can't work in these conditions, so they look to take it out.
It's a big issue for Storm - she has a moment to take down Magneto, but has sworn off killing people. She's there at the final confrontation with Magneto, where he comes close to killing Kitty, and then has a real change of heart, and well, let's quote it:
MAGNETO
She -- she is a child!
What have I done?
Why did you resist? Why did you not understand?!
Magda -- my beloved wife -- did not understand.
When she saw me use my powers, she ran from me in
terror. It did not matter that I was defending her...
...that I was avenging our murdered daughter.
I swore then that I would not rest 'til I had created
a world where my kind -- mutants -- could live free
and safe and unafraid. Where such as you, little one,
could be happy.
Instead, I have slain you.
I remember my own childhood - the gas chambers at
Auschwitz, the guards joking as they herded my family
to their death. As our lives were nothing to them,
so human lives became to me.
STORM
(arriving)
Magneto! Goddess -- no!
If you have a deity, butcher, pray to it!
MAGNETO
As a boy, I believed. As a boy, I turned my back
on god forever.
Kill me if you wish, wind-rider. I will not stop you.
STORM
Is this some kind of trick?
MAGNETO
Yes. Only it has been played on me. I believed
so much in my own personal vision, that I was prepared
to pay any price, make any sacrifice to achieve it.
But I forgot the innocents who would suffer in the
process. Can you not appreciate the irony, Ororo?
In my zeal to remake the world, I have become much like
those I have always hated and despised.
We learned about Magda running away in #125 and the contemporaneous Avengers #186, but most of this new information. Magneto's dialogue here is structured to pack as much punch as it can, by telling us what we know already and then, almost as an afterthought, revealing the new tidbit about a murdered daughte, and then going for the big thing. It must have been utterly shocking at the time for readers. This moustache-twirling villain has a motivation and not just one but two sets of personal tragedies (when Claremont comes to write Magneto's actual origin story six years from now, a third, less well-judged one will be added). Magneto is laid bare. How much of this does Storm actually overhear? Does Xavier find out about it? The idea that Magneto and Xavier are old friends is not yet present. These questions will never be answered: this is not treated as a dramatic revelation in-universe, and in fifty issues time it will be considered general knowledge.
This would seem to be Kitty's first Official Mission, although it's possible that she's stowed-away on this one, too. She's still in that multicoloured abomination of an outfit. As soon as she finds Scott, he sends her on a dangerous mission to mess up Magneto's computers, despite him realising that she's a child who really ought to be protected from that sort of thing. She succeeds, too, destroying a lot of his data (he should have had off-site backups!)
† other candidates in X-Men include the "Magneto/Professor X are old friends" bit, and my personal favourite "'Weapon X': It's pronounced 'ten'. Did we not mention that?" moment.
"(when Claremont comes to write Magneto’s actual origin story six years from now, a third, less well-judged one will be added)." What was that?
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