To elaborate a little on the other answers, Vref may be an input or an output (depending on the device). If it's an input, then it's a way to supply an exact 5.000V supply to sensitive parts of the chip. If it's an output, then it's telling you what the chip's internal power supply is providing (which you might need for other parts of your circuit). Chips like the Arduino Atmels have it as a programmable input - that is, it's defaulted to using the 5V from Vin unless you flip a switch with the code you run to specifically use the Vref pin instead.
The reason this matters (particularly with ADCs) is that when they convert an analogue voltage to a digital one, they'll use voltage reference to do it. Let's say that a particular ADC says it can convert any voltage from 0.0 to 5.0V into 0-1024. If you imagine putting in 2.5V, you'd expect to get a reading of 512 from the ADC (mathematically: 2.5/5.0 * 1024). However, if the ADC were using Vdd as the reference, and maybe the power supply was a bit high at that moment, so was supplying 5.2V. That would mean that the 2.5V input would return 492 (ie. 2.5/5.2 * 1024). Because of that low reading, the circuit around it turns something on, which draws some additional power supply current, so the supplied voltage goes down to 4.9V... and now the 2.5V reading becomes 522.
To avoid this obvious problem, the ADC compares the input to a high-precision voltage source. Chips like the Arduino can use their own, internal precision power supply for this, or you can use an external chip to provide the precision voltage that the ADC will use in its comparisons.
As the old saying goes "you get what you pay for". The Arduino built in voltage source is pretty good - and suffices for nearly all the sorts of things Arduinos really get used for. However, if you were doing some sort of super-precision analogue measurements, then you may want to spend a few extra quid on a precision voltage source, and then connect that to the Vref pin so that the ADC gets a super-constant, super-accurate 5.0V reference all of the time.