It is basically a safehaven (or refuge, hence the name) for pods, etc to breed unhindered by other tank inhabitants. It can be anything from a simple eggcrate leaning against the wall of the main tank all the way up to a complex setup in a sump.
Based on your stocking from the other thread (I'm assuming you are asking in relation to that one?) probably not. Pods are a good supliment to the diets of fish in a marine tank but if you were to add a bit more liverock to the tank then I can't see one clown making too big an impact on their population (as long as there is plenty of cracks and crevices, etc that the clown can't get into you should be fine). Not only that but because the tank is on the small side your best bet would be using a sump as a refugium so it isn't taking up precious space inside the main tank.
The only dumb question is the one not asked A sump is basically just another tank which is connected to the main tank by pipes to make the water volume of the main tank greater. This helps keep the water perameters more stable and provides a place to keep equiptment such as heaters, skimmers, etc. They can also be used as an external filter if they have things like macro algae, mangroves, etc used in them.