diff --git a/IPython/core/magics/basic.py b/IPython/core/magics/basic.py
index 7f062c1..d170253 100644
--- a/IPython/core/magics/basic.py
+++ b/IPython/core/magics/basic.py
@@ -120,11 +120,36 @@ IPython's 'magic' functions
 
 The magic function system provides a series of functions which allow you to
 control the behavior of IPython itself, plus a lot of system-type
-features. All these functions are prefixed with a % character, but parameters
-are given without parentheses or quotes.
+features. There are two kinds of magics, line-oriented and cell-oriented.
+
+Line magics are prefixed with the % character and work much like OS
+command-line calls: they get as an argument the rest of the line, where
+arguments are passed without parentheses or quotes.  For example, this will
+time the given statement::
+
+        %timeit range(1000)
+
+Cell magics are prefixed with a double %%, and they are functions that get as
+an argument not only the rest of the line, but also the lines below it in a
+separate argument.  These magics are called with two arguments: the rest of the
+call line and the body of the cell, consisting of the lines below the first.
+For example::
+
+        %%timeit x = numpy.random.randn((100, 100))
+        numpy.linalg.svd(x)
+
+will time the execution of the numpy svd routine, running the assignment of x
+as part of the setup phase, which is not timed.
+
+In a line-oriented client (the terminal or Qt console IPython), starting a new
+input with %% will automatically enter cell mode, and IPython will continue
+reading input until a blank line is given.  In the notebook, simply type the
+whole cell as one entity, but keep in mind that the %% escape can only be at
+the very start of the cell.
 
 NOTE: If you have 'automagic' enabled (via the command line option or with the
-%automagic function), you don't need to type in the % explicitly.  By default,
+%automagic function), you don't need to type in the % explicitly for line
+magics; cell magics always require an explicit '%%' escape.  By default,
 IPython ships with automagic on, so you should only rarely need the % escape.
 
 Example: typing '%cd mydir' (without the quotes) changes you working directory