The purpose of this application is to create bibliographies based on an input file which contains a list of citations conforming to the CitationList XML DTD. This input file is thus not the document that you write but rather a list of citations that is extracted from your document. In the case of LaTeX/BibTeX bibliographies, the citations are listed in the .aux file which is automatically created by the LaTeX interpreter. In the other cases, the citation list is extracted from your document with (Open)Jade or xsltproc for SGML and XML documents, respectively.
Besides the bibliography data, refdbib creates additional files in the case of SGML and XML documents. These are style sheet driver files which can be used for subsequent document transformations. They contain a few variable definitions to adapt the formatting to the required citation and bibliography style.
Note: While you certainly can run refdbib directly, it is not recommended to do so in most cases. Some output, like the style specification driver files, needs post-processing to be fully usable. For your convenience, refdb ships with the runbib script which extracts the citation list, creates the bibliography file, and performs all necessary post-processing with a single command.
To make things even simpler, please have a look at the refdbnd script. This script creates a skeleton SGML or XML file along with a customized Makefile which takes care of everything (except preparing coffee, that is).