Wireless sensor networks (WSNs) are ubiquitous in a wide range of applications requiring the monitoring of physical and environmental variables, such as target localization and identification. One of these applications is the sensing of ferromagnetic objects. In typical applications, the area to be monitored is typically large compared to the sensing radius of each magnetic sensor. On the other hand, the RF communication radii of WSN nodes are invariably larger than the sensing radii. This makes it economical and efficient to design and implement a sparse network in terms of sensor coverage, in which each point in the monitored area is likely to be covered by at most one sensor. This work aims at investigating the sensing potential and limitations (e.g. in terms of localization accuracy on the order of centimeters) of the Honeywell HMC 1002 2-axis magnetometer used in the context of a sparse magnetic WSN. The effect of environmental variations, such as temperature and power supply fluctuations, magnetic noise, and sensor sensitivity, on the target localization and identification performance of a magnetic WSN is examined based on experimental tests. Signal processing strategies that could enable an alternative to the typical "target present/absent" mode of using magnetic sensors, such as providing successive localization information in time, are discussed.