Step 1: Understanding the Concept:
Ferromagnetism is characterized by spontaneous magnetization and the formation of domains due to strong exchange interactions between atomic dipoles. The Curie temperature ($T_c$) marks the transition from ferromagnetic to paramagnetic behavior.
Step 3: Detailed Explanation:
Assertion (A) is true: Ferromagnetism is indeed explained by the domain theory where individual atomic dipoles align spontaneously in small regions called domains.
Reason (R) is true: Increasing temperature increases thermal agitation, which eventually overcomes the alignment forces, causing the material to become paramagnetic at the Curie temperature.
However, (R) describes the \textit{disappearance} of ferromagnetism with temperature, while (A) describes the \textit{cause} and structure of ferromagnetism. (R) does not explain \textit{why} the atoms align in the first place (which is due to exchange coupling). Therefore, (R) is not the correct explanation of (A).
Step 4: Final Answer:
Both (A) and (R) are true but (R) is not the correct explanation of (A).