Refurbished iPhones are devices which are pre-owned. They might have had a faulty part—screen issue, faulty software, battery problem—and were sent back to the manufacturer. Or, they were a display item that is now getting prepped to go on the market.
How do iPhones get refurbished?
First, the phone gets sent back to the manufacturer or to a refurbisher. The first step is to find out what (if anything) is wrong with it, so the iPhone is subjected to a battery of tests. Both hardware and software are tested. If any issue arises, the faulty parts will go through troubleshooting.
Whenever possible, the refurbisher will fix a defective part. However, some issues, such as a cracked screen, cannot be fixed. In that case, the refurbisher will replace the part with a brand new one.
Once all the parts are in working order again, the refurbished iPhone is thoroughly cleaned before it goes through a last set of tests again. Product testing is crucial to make sure the device is ready for sale. Only when an iPhone passes these tests—just like a new one would!—the refurbisher can stamp them as refurbished.