We review, apply and compare diverse approaches to the theoretical understanding of the dynamical and rheological behaviour of ferrofluids and magnetorheological (MR) fluids subject to external magnetic and flow fields. Simple models are introduced which are directly solvable by nonequilibrium Brownian or molecular dynamics computer simulation. In particular, the numerical results for ferrofluids quantify the domain of validity of uniaxial alignment of magnetic moments (in and) out of equilibrium. A Fokker–Planck equation for the dynamics of the magnetic moments—corresponding to the Brownian dynamics approach—and its implications are analysed under this approximation. The basic approach considers the effect of external fields on the dynamics of ellipsoid shaped permanent ferromagnetic domains (aggregates), whose size should depend on the strength of flow and magnetic field, the magnetic interaction parameter and concentration (or packing fraction). Results from analytic calculations and from simulation are summarized for the anisotropy of the viscosity. In order to study the effect of flow on the anisotropic viscosities and shear-induced structures of MR fluids and ferrofluids subject to a strong external magnetic field, a simple model of perfectly oriented particles is considered.