Apple is very restrictive about iPhones, forcing users to buy only through authorized carriers like Verizon and AT&T and forcing all app installations to go through the App Store. AT&T and Verizon may sell “refurbished” phones, but chances are they won’t be much cheaper than new phones as they make their money off of big plans anyways.
An “unlocked” or “jailbroken” iPhone is a phone that has been hacked to get around those restrictions. There are a lot of disadvantages to having a jailbroken phone, such as possibly being locked out of you data plan or having the phone get bricked when it tries to update, and it’s not recommended unless you know what you are doing.