The differences are:
1. The product may be used and returned because faulty (Apple will fix) or surplus to requirements (Apple will check for wear and tear).
2. The products may be part of a cancelled order, and are returned unopened. In the UK, at least, these do not go back in stock, but have to be sold as used, although they are brand new. In the Applestores, these are labelled "refreshed" as opposed to "refurbished" on the online store.
3. All such products are checked before sale and are repackaged with the original accoutrements in a plain box, to prevent these being resold on eBay later on as new. "Refreshed" items are sold in the Applestores in the original packaging.
4. If the products are part of a Built to Order (BTO) and have more than the stock memory, hard drive size etc, then these will be passed on in the refurbished inventory at no extra cost. Most refurbished stock is labelled as per the standard configuration, with some exceptions. It is a lottery as to whether you get 'extras' with your refurbished order.