In a refugium, you are making a mini-aquarium that also contains filtration material. I will try to address the concept:
First compartment will be the filter and bio material.
Second compartment will be the actual "mini-aquarium".
3rd will be the final filter (i.e. a sponge)
4th will be the reservoir for return water and return pump
This is a very good view of a refugium It utilizes the plant for the mechanical filter and only has bio-balls to assist in bio-development. This is one concept, but the box itself is fairly self-explanitory.
This is a basic sump system. You can see that this moves the filtration out of the aquarium and relocates it. Think of it as a remote filter. All it does is move the filtration to a different location and then has a reservoir "holding tank" for the return water.
You can also combine the two concepts (which is what I did). I had a filtreation compartment, a refuge with plants, substrate, and fish, a final sponge filter, reservoir for return water with a submersible pump in it.
With my combination unit, what the filter didn't remove, the susbtrate and plants did. It also expaned my bio-filtering as the plants consumed many of the elements. I made it out of a 10 gallon tank and had it as a secondary filter on a 100. The only drawback was that I had to top it off daily due to it's small size. I have since made a larger one (30 gallons) and I rarely need to top it off.
Ideally, it shoudl be 1/3 of display tank size. As long as you are doing FW, size isn't of major concern unless it is your only filtration method.