The main difference between a new and refurbished product is price (up to 80% cheaper).
Refurbished Apple products are 100% functional, and all components work like new. A refurbished device was either pre-owned or used as a display item. Refurbished products go through the same testing process as new items do, so any defect was 100% repaired. Any faulty part was replaced.
Aside from the lower price, the difference between new and refurbished products is their cosmetic condition. Note that this solely concerns the cosmetic appearance of the device—a refurb is thoroughly cleaned.
Did you know?
If your new Apple device breaks and Apple gives you a replacement, you're getting a refurbished device. That’s right; you literally can’t tell the difference between new and refurb in this case. Apple refurbishes its own products and classes them as excellent (Grade A).