What does apple do with them?

Referb'd for replacements, Reverb store or in bulk to 3rd party vendors

 

They would refurbish them before offering them on the refurb store. They would not offer them to anyone as a new product, if it's been returned.

Apple refurbished products are considered by most to be a very good deal, as they're pretty much like buying a new Mac, except for the box.

• Apple Certified Refurbished Products are only available from the Apple Refurb Store and are not sold by any 3rd party or local Apple stores
• Educational discounts do not apply to refurb products.
• Refurb products come with the same warranty as new products, and qualify for AppleCare
• Refurb products have a changed serial number that identifies them as refurbished
• Refurb products come with whatever OS version and software they originally shipped with as new
• Refurb products come with the same items in the box as new products, only the box is a plain one, not the new box.
• A refurb product could have some cosmetic signs of prior use, but rarely do
• A refurb Mac may have some cycles on the battery, but not a significant enough amount to affect usable life
• The refurb store inventory changes frequently, sometimes several times a day, and doesn't have any direct relation to upcoming product releases. What's available in the refurb store is determined by what has been returned to Apple.
• If you're looking for a particular item, refurb.me can alert you when it becomes available.

 

They don't get resold. They get put into a returns bin and then the Back Of House specialists take it from there.

 

I imagine it depends on where they get returned.

Amazon and Best Buy may re-sell them at a discount or return back to Apple.

I just went to Apple's online refurb store and there are 5 13" MBAs. Most of them priced too close to what a new one would cost.

 

Often though the price of referbs is only slightly below the new of the same model.

I'd rather have reassurance and the feel and smell of the new product rather than save 40 to 50 dollars.