The nature of momentum transfer and the resulting thrust generation in magnetic nozzles is investigated. First, it is shown analytically using a Green's function formulation that thrust transmission results from the interaction of the magnetic field induced by the currents in the plasma with the current in the applied field coil and is equal and opposite to the integral of the volumetric and surface Lorentz force densities due to the applied magnetic field acting on the plasma. Second, using a two-fluid plasma model, it shown that, contrary to previous belief [Ahedo and Merino, Phys. of Plas., 18(5) 2011], positive thrust production can occur for a detachment mechanism that induces paramagnetic plasma currents, as long as a criterion, which ensures the dominance of the force density due to the diamagnetic current at the plasma-vacuum boundary (which contributes to thrust) over that due to paramagnetic current, which results from the inertial detachment process (and which diminishes thrust), is satisfied. The model also shows that the thrust efficiency suffers with increasing magnetic field divergence and plasma magnetization, which enhance the relative contribution of the paramagnetic current; and that inertial detachment occurs when a hybrid particle of mass mH = (meMi)1/2 becomes demagnetized.