How does dbt ref work?

Could you please elaborate on how the dbt ref functionality works? I'm particularly interested in understanding how it enables users to efficiently manage and reference their data models, as well as the benefits it brings to the data transformation process. Additionally, I'd like to know if there are any specific use cases where dbt ref shines or if there are any potential limitations to its usage. Lastly, could you provide an example of how a data engineer might use dbt ref in their daily work?