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Some of the most sensitive methods of measuring magnetic fields use interactions of resonant light with atomic vapour. Recent developments in this vibrant field have led to improvements in sensitivity and other characteristics of atomic magnetometers, benefiting their traditional applications for measurements of geomagnetic anomalies and magnetic fields in space, and opening many new areas previously accessible only to magnetometers based on superconducting quantum interference devices. We review basic principles of modern optical magnetometers, discuss fundamental limitations on their performance, and describe recently explored applications for dynamical measurements of biomagnetic fields, detecting signals in NMR and MRI, inertial rotation sensing, magnetic microscopy with cold atoms, and tests of fundamental symmetries of nature.