Suspensions of superparamagnetic colloids that equilibrate in a toggled magnetic field undergo a Rayleigh-Plateau instability with a characteristic wavelength λ = 600 μm for the toggle frequency ν = 0.66 Hz. The instability is suppressed when the chamber length L in the field direction is less than 2λ. The final size of the magnetic domains perpendicular to the field, D, follows a power law relation of D ∼ L(0.71±0.07). These results demonstrate the structural differences of field-directed suspensions when confined to lengths scale set by the phase separation process and can potentially be used to create self-assembled colloidal crystals with well-defined size and shape.