From what I understand, you can refine up to the 5th level on a single piece of equipment (since you're using Pure Ferrite, it can only refine up to a level of 4). You can only refine head, tail, gloves and anklets with it. Honestly, I'd rather save the ferrites to use on higher level equipment.
Each time you successfully refine a piece of equipment, you get 1 Armor. It's hardly much, and you'll only feel the increase when you're refining multiple equipment. You only get the damage boost when you're refining your main hand glove (gives 1 Attack/Magic per refinement level). I'm not exactly sure about the success rate, but I think it's guaranteed on the first refine.
When you fail, there's a chance that the refinement level stays the same, or it drops by 1. It won't destroy your equipment.