The subject is to study two-dimension phase transition. The nano-magnetic particles dispersed in magnetic fluid can aggregate to form magnetic columns under external perpendicular magnetic field. At some appropriate condition, these magnetic columns are able to form two-dimension lattices. It is a novel mesoscopic system for studying two-dimensional melting transition. By controlling external magnetic field, we explore phenomena of phase transition and defect dynamics. This article can be divided to three parts. In the first part, we study the phase transition with two-dimension lattice forming with magnetic fluid, then we classify the crystal, hexatic and liquid phases in the melting process with translational correlation function and bond-orientational correlation function. In the second part, we analyze the defect dynamics within the lattice with Burgers Vector. In the third part of this article, the external DC magnetic field is replaced with the AC magnetic field, we find that the two-dimension lattices are also formed in low frequency region. The relationship between the two-dimension lattice forming and the AC frequency are studied.