If the item description said "new", they're not allowed to sell you a refurbished product. However, they are allowed to handle warranty issues by replacing a product that you originally bought new with a functional "refurbished" product.
As far as how companies come up with refurbs, sometimes they're just excess stock when an item is being discontinued. Sometimes they're warranty returns that get repaired and resold. It's different with each company and each item.
Life can only be understood backwards; but it must be lived forwards.
- Soren Kierkegaard