For a reed, sand is preferable. Crushed coral can trap solid wastes, and this contributes to high nitrates--not a good thing for a reef tank.
A refugium is a separate tank that has slow water movement from the main system, typically a sand bed, and some live rock rubble. Often, they'll be set up with lights that are opposite to the main tank and have macro algaes. They serve to stabilize pH (algae/CO2), and house beneficial organisms that may not survive predation in the main tank, like pods, snails, stars, and other micro-fauna.