There's no catch. The batteries have 0 or 1 charge cycle (reflecting testing only). There are no scratches, no dents, no nothing. The only issue is that, legally, Apple cannot resell them to consumers as "new." They're a heck of a deal.
Apple refurbs are the exception to the usual rule in electronics. Many manufacturers don't have as rigorous a testing cycle, and they sell their refurb products (e.g., TVs) with a 90 day warranty. The quality of Apple's products, the standard 1 year warranty, and the fact that you can buy AppleCare all basically make buying refub a no-brainer unless you want to have a new product within the months following its introduction.