Its a circulation of water into another container from the main tank and back. Think of it like a hamster house with a little tunnel to another house and a tunnel going back. The sump is used to store the equipment like skimmer and heater. The refuge is the same as a sump but usually just has macro algae (plants). The fuge water runs slower than the sump water so is most likely a seperate container.
A sump as a location of external filtration for your tank...the water is removed from the tank, flows to the sump, goes through the various stages of filtration with in the sump...most people whom use refuges do so for additional filtration...generally the water flow into and out of the refuge is somewhat slower the the normal sump flow...some will have a seperate pumping system taking water from the sump into the refuge and back into the sump...others will have the overflow (water from the tank to the sump) valved off to supply a slower flow rate directly to the refuge and then to the sump.
Do a search for sumps here...they can literally be however you want them to be... limited to your own imagination.
Yes on the wet/dry...some people use sumps to expand their water capacity..I built mine for a couple reasons...most importantly to move my filtration to the basement...my wife was getting tired of tripping over the hoses between the tanks and the kitchen sink...now they are in the basement..I have plenty of room for everything...the other reason for my sumps was to increase the water capacity primarily for my 45...it now has about 100 gallons total...my 90 has about 125 or so.