A refurbished iPhone is a pre-owned iPhone being offered for sale that has undergone Apple’s refurbishment process. All units of any product returned to Apple go through the stringent refurbishment process before being offered for sale again.
When a customer returns a phone, Apple tests it to see what the issues with the phone are, if any. Technicians then replace any defective pieces or parts, and then the product goes through a thorough cleaning and inspection process. Apple then repackages the product with new manuals, cables and any software that originally came with it. The product then gets a new refurbished serial number and part number, and goes through one final inspection before being added to refurbished stock.