Purification of Ethanol In Vogel's organic book, they have mentioned that in the Lund and Bjerrum method of purification of ethanol, magnesium is added, which forms ethanolate. But they said to activate the magnesium first by iodine. 

Why is the activation needed and how exactly does this activation process work in the activation of magnesium?
The refluxing of methanol or ethanol over magnesium is indeed the method of choice to dry these solvents. 

As far as the iodine is concerned, this is a classical trick, which is also used to initiate Grignard rections. Is is assumed that magnesium iodide is formed, which is soluble in the alkanols. As a result, a fresh, activated metal surface is left behind. 

This might even work, when the magnesium metal is covered with a very thin oxide layer.