The Three Jewels are the Buddha, Dharma and Sangha. Buddha is one who has purified all the defilements of the mind the afflictive emotions, the imprints of the actions motivated by them, and the stains of these afflictive emotions and who has developed all good qualities, such as impartial love and compassion, wisdom knowing all existence, and skillful means of guiding others.
The Dharma embodies the preventive measures which keep us from problems and suffering. This includes the teachings of the Buddha, as well as the realizations of those teachings the cessations of problems and their causes, and the realizations or paths which lead to those cessations.
The Sangha are those beings who have direct non-conceptual perception of emptiness or ultimate truth. On a relative level, Sangha also refers to the ordained people who put the Buddha's teachings into practice.
The Dharma is our real refuge, the medicine we take which cures our problems and their causes. The Buddha is like the doctor, who correctly diagnoses the cause of our problems and prescribes the appropriate medicine. By assisting us in the practice, the Sangha is similar to the nurse who helps us take the medicine.
Taking refuge means that we rely wholeheartedly on the Three Jewels to inspire and guide us towards a constructive and beneficial direction to take in our life. Taking refuge does not mean passively hiding under the protection of Buddha, Dharma and Sangha. Rather, it is an active process of taking the direction they show and improving the quality of our life.
