Magnetic saturation exists when an increase of magnetization applied to a reed contact does not increase the magnetic flux through. In the case of a magnet actuating a Reed Switch, it is the point at which a Reed Switch attains maximum closure force and moving the magnet any closer will not matter. In the case of a Reed Switch being inside a coil, it is the overdrive beyond which the contact resistance does not drop any further.
Seen in some magnetic materials, saturation is the state reached when an increase in applied external magnetic field H cannot increase the magnetization of the material further, so the total magnetic flux density B more or less levels off. (It continues to increase very slowly due to the vacuum permeability.) Saturation is a characteristic of ferromagnetic and ferrimagnetic materials, such as iron, nickel, cobalt and their alloys.