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I keep some hermits and snails in mine. Its small a HOB fuge. Others have larger ones and keep cheap fish in there. You don't want to stock it heavy. Extremely lite stocking or it will defeat the purpose of having a fuge.
Any kind of macroalgae (not just chaeto). You can also keep in anything that pods will use for hiding/housing (like bioballs that I have seen some people use), not just LR. You can keep your standard clening crew - snails, hermits, stars etc. Don't keep fish because then it wont be a refugium at all but just another connected tank. Even the fish that is considered completely herbivoreus might eat nice zooplankton that you want to cultivate mostly for your corals.