We discuss the formation of globules in planetary nebulae, typified by those observed in the Helix Nebula. We show that the properties of the globules, their number, mass, separation, and overall geometry strongly support a scenario in which globules are formed by the fragmentation of a swept-up shell as opposed to models in which the knots form in the AGB wind. We show that the RT or other instabilities which lead to the break-up of shells formed in the nebulae by fast winds or ionization fronts can produce arrays of globules with the overall geometry and within the mass range observed. We also show that the presence of a magnetic field in the circumstellar gas may play an important role in controlling the fragmentation process. Using field strengths measured in the precursor AGB envelopes, we find that close to the central star where the fields are relatively strong, the wavelengths of unstable MRT modes are larger than the shell dimensions, and the fragmentation of the shell is suppressed. The wavelength of the most unstable MRT mode decreases with increasing distance from the star, and when it becomes comparable to the shell thickness, it can lead to the sudden, rapid break-up of an accelerating shell. For typical nebula parameters, the model results in numerous fragments with a mass scale and a separation scale similar to those observed. Our results provide a link between global models of PN shaping in which shells form via winds and ionization fronts, and the formation of small scale structures in the nebulae.