You don't need two magnets. You need to have both magnetic poles passing the sensor! This can be done with a single magnet, but also with two magnets where one presents the north, the other the south pole.
This can explain why you see the sensor "reverses" it's output at times or see it not react at all: you're probably holding the magnet the other way around (which apparently matters for this sensor):
Output toggles when a north followed by south pole of a magnet are nearby. Note: Requires both a north and south pole to function.
So if you move the magnet north first along the sensor, it'll react. When you move it south first it does not react the first time, but will reverse it's reaction the second time: the first half pass, the south pole, is ignored - the north pole in the second half is registered, then when the south arrives of the second pass it reacts.
Furthermore, this sensor toggles upon passing of a magnet and then stays in that position. So it's not HIGH when close LOW when far away: it's HIGH after one pass (north then south), LOW after the second pass, HIGH after the third pass, etc.