It's a reduced price for a machine with the same warranty as a new computer.
Many people get machines that look as good as new.
I've purchased refurbs and had mixed results with Apple. Some have been great, some have literally looked like the were dragged down the highway behind a truck.
One iMac came to me with a chunk missing from the top about a half inch of material missing from the case. The screen and the case had severe abrasions covering the entire surface. And the keyboard and mouse looked as bad.
I contacted Apple immediately after opening the box, and was informed that they would not accept the machine back. And was told that the damage was cosmetic and not covered by the warranty.
Refusing to accept that argument, I took it and the shipping receipt confirmation down to the local service center. I was able to show that I had literally just signed for the machine's delivery. And that obviously I had not had possession of the machine long enough to inflict such severe damage. I was there within an hour of signing for the package. And had a printout of the delivery confirmation.
The service center also informed me that the damage was cosmetic in nature and would not be covered by the warranty.
But my savior came in the form of malfunctions inside the machine. I had them test it. And the machine powered up, but had a faulty Ethernet port requiring a new logic board.
So in the end, the machine was replaced. But only because it had an operational defect.
If all that was wrong with it was that it arrived an ugly mess, I'd have been stuck with it as is.
Apple's warranty excludes cosmetic defects. And they have refused to permit exchanges based on cosmetic defects on more than one occasion with me.
I've had them ship me brand new iPods with major scratches in the case and paint as well. And refuse to permit returns on them.
So while your odds are good that your refurb purchase will be fine, there are chances you could get something less than nice, and be stuck with it.
I only purchase my Apple items from local independent stores now. I buy only from places that give me 30 days no questions asked return policies. I can return it just because I changed my mind, because it's got a flaw, I decided I didn't like the color, or no reason at all. I do not buy through Apple's channel anymore. Not worth the restrictive return policy or the gamble.
So simply put, your odds on a refurb are 50/50. And I wouldn't envy your options if your machine arrives with physical flaws.