There are different setups that you can use. but in general it is just a refuge as stated above. It is a place without predators. A place for macro algea to grow and also a place to hide equipment that you don't want to see in the main tank. skimmer, heaters calcium reactor, carbon, ect...... I strongly recomend using one on any system that allows the installation of one. Setup properly they do wonders for your tank such as nutient export and food import to the tank. They are also fun to watch almost as much as the main display. All the critter the live in the macroalgea, livesand, and live rock are entertaining to watch. I like it when they are setup like a display, kinda like a planted marine tank. It is als a place to do certain maintenance things. doing a water change, adding chemicals, topping off you water. It is better to do these things in the refugium than disturbing the main tank..
Anyways Good luck. Be prepared and take your time if you get a tank. And most of all read read read read. You will never know every thing in this hobby so read till your eyes bleed and learn as much as you can. You might think what you are reading doesn't pertain to your tank then later down the road it just might save your neck or at least the neck of your live stock.
Peace
Mitch