Here is my own personal theory, which is based on everything shown ON-PANEL.
"Kwan-Yin" Xorn (stupid name, that's the name of the Chinese Taoist GODDESS of Mercy, Chuck Austen insulted Chinese and Taoists with his cultural misappropriation) became an energy being who required a host body.
Magneto was power-drained AGAIN (like after his final battle against Joseph) after the Genoshan Massacre as he put ALL of Genosha's 16 Million plus mutants (if you read New Xmen 116, it was actually just a few hundred thousand short of 17 Million, and I think Marvel just rounded it off to 16 Million tsk tsk tsk) and so needed a source of power AGAIN.
Magneto's followers in China tricked him into becoming the host body of KYX by pretending to have constructed Feng Tu as part of set-up for Magneto get at John Sublime (but it turns out that Feng Tu was real after all as BOTH Xorn brothers were each in separate underground prisons).
Basically Magneto + Xorn = Darwin + Vulcan.
KYX's consciousness was dormant so Magneto didn't know that he was now the host of KYX in energy form.
Magneto's method acting in the role of KYX was based on info about his personality given to him by his followers about the real KYX.
KYX's consciousness awoke during Planet X when Magneto was also possessed by Sublime in his aerosol form as the mutant-power-booster drug Kick.
Magneto was basically possessed at the same time by both Xorn and Sublime = Angel and Devil?
Wolverine beheaded Magneto and Xorn became a free spirit.
Scarlet Witch (I refuse to acknowledge last year's Axis' retcon which will most likely be undone anyway like all of the High Evolutionary's retcons to Earth-616's history) resurrected her daddy and so the coffin that Xavier brought with him to Genosha was actually EMPTY because if there was really a dead body in it, obviously it should have started STINKING already that SOMEONE on Genosha should have commented on it but NOBODY ever did.
And remember Magneto had those mysterious "migraines" during his stay in Genosha with Xavier & Co. whenever he used his powers or even just thought too much, which NEVER happened before.
Magneto also was able to create a time-space worm-hole for the first time (which only Xorn was shown to have done previously) and was even wearing the EXACT SAME COSTUME THAT HE WORE IN PLANET X when he "rescued" his daughter from the Avengers after she went crazy in Avengers
isassembled.
The Decimation depowers most of Marvel-616's genetic mutants (who were actually 300 according to Henry Peter Gyrich in Avengers:Initiative, and not 198, as Wikipedia's own now-gone list of all powered mutants who appeared on-panel during those years EXCEEDED 198).
Xorn is absorbed into the ball of depowered mutant bio-energy and goes crazy.
He possesses Michael Pointer and becomes the Collective.
The Collective goes to Genosha and ditches MP to repossess Magneto, reminding him of their "connection" implying a past relationship.
The Avengers beat the Collective out of Magneto and Sentry throws him into the Sun itself.
He may still be alive there for all we know, hanging out with Demogorge
.
Anyway, Wolverine confirms that Xorn was Magneto Possessed By Sublime, to White Phoenix Jean Grey (GOD-MODE) in Here Comes Tomorrow.
Why would he bother to even lie to her and she could tell if he was lying anyway.
Somebody EMAIL this to Cullen Bunn ASAP.