The reactive power flows over the circuit to an electromagnetic device (such as a motor or transformer or relay coil) to provide the magnetic field required by such devices. It is the nature of a capacitor to store energy and recirculate it on the power system whenever the voltage changes. Therefore, a properly sized capacitor connected on the power lines near a motor can receive and store the energy when the motor is returning it to the system and can then supply magnetizing energy when the motor needs it. (You might consider the motor as the user of magnetizing VARs and the capacitor as a supplier of magnetizing VARs). These VARs need only flow on the part of the power line between the motor and the capacitor. This is why it is generally preferable to locate the capacitors near the loads, rather than at the site's main transformer.
