Changing the internal structure of code without changing what it does from the outside. The behaviour stays identical; the code becomes easier to understand, test, and extend.
Code is read far more often than it is written, and every feature is built on top of whatever shape the previous ones left behind. Refactoring is how a codebase stays cheap to change instead of slowly becoming untouchable.
We refactor continuously as part of feature work rather than asking for a separate rewrite budget, and we rely on tests to prove behaviour has not changed. Large rewrites are a last resort, not a default.