The battery-powered active RFID tag in a MagicBand is only supposed to last about 2 years. That active tag fuels some of the interactive aspects within the parks, like capturing your photo on Mine Train or posting your name at the exit to Small World. Just two examples that immediately come to mind.
Anyway, if you don't want to lose access to some of those features, it's best to rotate to new MagicBands every couple of years. When the battery powering that active chip dies, certain features will no longer work. (Passive features like opening hotel room doors, park admission, FP redemption should continue indefinitely, barring any physical damage to the band.)