It all depends on who does it and what kind of job they do. I personally work for a computer repair/retail shop, and we refurbish laptops and desktops in house. Typically the process goes as follows.
Test all the hardware and verify there are no bad or failing components. (Extended SMART test on HDDs)
Wipe the HDD and load a fresh install of Windows.
Install all updates, drivers, runtimes.
Activate.
We typically do not have issues or complaints from customers who by our refurbished systems and many people praise our work. For the money it is a great deal as you are getting similar performance of a new system for about half the price. I purchased my laptop refurbished and its the best laptop I've ever owned.
I would trust manufacturer refurbished, but I've also seen refurbished laptops from Newegg or Amazon that seemed to work, however the hard drives were starting to fail. Keep this in mind and hopefully you get one with a good warranty. Our shop offers 90 day warranties on refurbished systems and we offer extended warranty for up to one year. Hopefully you have a good local shop near by that offers the same.