Friction without contact discovered as magnetic forces break a 300-year-old law
(www.sciencedaily.com)
Yeah, I think that pushes them apart, keeps them from actually occupying the same space. So that's definitely involved. But why do molecules moving past each other lose momentum? I could make a guess, but I'm not actually certain. Like I said, physics tends to be pretty unintuitive at this scale.
(Technically I suppose they're not losing momentum, they're exchanging it for heat)