Refactoring is the process of changing a software system in such a way that it does not alter the external behavior of the code yet improves its internal structure. It's a disciplined way to clean up code that minimizes the chances of introducing bugs[2].

The main purpose of refactoring is to improve the design, structure, and/or implementation of existing code (its non-functional attributes) while preserving its functionality. This can lead to improved code readability, reduced complexity, better maintainability, and a simpler, cleaner, or more expressive internal architecture[4].

Code smells are indicators of problems in code that may be addressed by refactoring. They are surface indications that usually correspond to deeper problems in the system. Examples include long methods, duplicated code, or complex conditional structures[1][3].

Continuous refactoring helps maintain and continuously improve the design of code, making it easier to work with over time. This contrasts with the typical approach of paying little attention to refactoring and focusing mainly on adding new features, which can lead to deterioration of code quality[2].

Refactoring and design patterns are closely related. Refactoring can be used to evolve code towards well-known design patterns, improving its structure. Conversely, understanding design patterns can inform refactoring decisions, helping developers recognize opportunities for improvement[3].

The two main types of refactoring mentioned are:

1. Preventive refactoring: Done by the original developer to make the code more robust and prevent future code smells.
2. Corrective refactoring: Performed by subsequent developers to address existing code smells[4].

Testing is crucial in refactoring because it helps ensure that the external behavior of the code remains unchanged during the refactoring process. Good test coverage provides confidence that refactoring efforts haven't introduced new bugs or altered the functionality of the system[2].

Challenges in refactoring include:

1. Extracting and understanding the existing system structure and dependencies
2. Dealing with missing or inaccurate knowledge due to team turnover
3. Potential deterioration of architectural properties if not done carefully
4. Balancing refactoring efforts with the need to add new features[4].

Refactoring tools can automate many of the mechanical aspects of refactoring, such as renaming variables or extracting methods. They can also provide analysis of code structure and dependencies, helping developers identify areas that need refactoring and ensuring that changes are applied consistently across the codebase[4][5].

While the primary goal of refactoring is to improve code structure and maintainability, it can also lead to performance improvements. By simplifying and clarifying code, refactoring can make it easier to identify and optimize performance bottlenecks. However, specific performance optimizations should typically be done after refactoring for clarity and structure[2][4].