Dan,
A refugium is a contained area, seperated from the main tank that is used for growing out frags, marco algea, and pods.
There are three different types of refugium, HOT, inside the tank and under the tank around the sump but seperated from. The refugium contains in most cases, a sand bed or mud bottom, macro algea, live rock and a light.
People that do fragging, will place the newly created frag into the refugium for grow out. It's a safe haven away from all preditors. I use mine as a pod production unit for my main tank.