Localized ferromagnetism refers to materials where the magnetic moments are primarily associated with localized atomic orbitals.
Ferromagnets, such as those made of iron or nickel, are called itinerant because the electrons whose spins aligned to create the magnetic state are extended and are the same as the ones responsible for conduction.
I don't understand how can localized ferromagnetism exist at all. From my understanding, a large gap insulator will always be non-ferromagnetic because the full valence band always have electrons paired up and leave no net electronic magnetic moment (while nuclear magnetic moment is negligible for ferromagnetism). The energy favorability of spin alignment is much smaller than overcoming the large band gap, so the spins are always paired.
This means ferromagnetism can only occur in metal or small gap insulator where the energy favorability of having aligned spins is larger than the energy favorability of strictly filling the spin-unpolarized states below the fermi-level (before considering the interaction of electron spins).
Is my understanding of the necessary condition for ferromagnetism correct? (ie, energy favorability of aligned electron being larger than band gap)? If this is correct, how can localized ferromagnetism exist at all?