A refugium is a holding tank usually seperateof the sump. There are sump/fuges where it is a filter and a fuge in one setup instead of two differnt tanks.
All you need to do is get some sand, liverock if you want and some macro algae, some medium water flow through it and a light. You have a fuge. the food that grows in a refugium are pods, starfish, worms. This live food will be safe in the fuge since there arent any predators like fish to eat them, so they will eat reproduce and over and over.
The live food will go into the main tank for food for fish, mandarins etc.
A regular fuge is usually set up so it is higher than the main tank. You will need a powerhead in the main tank to pump water to the fuge, so a hose from the power head to the fuge. The fuge wil fill up with tank water. Then at the other end of te fuge you should have a bulkhead that will drain into the maintank.
So water fom the maintank enters the fuge, then that water will flow through the fuge and gravity wil take place and drain water from the fuge to the main tank.
The other type of fuge is a sump/fuge, where the sump and fuge are togther.
The overflow from your tank will go into you sump like normal but you will have a fuge in place there now. As the water flows through it will pick up pods etc. and get pumped back to the main tank.
Here is a pic of my sump/fuge...