Preventing water from exiting the tank can beachieved through proper height adjustment of the overflow pipe. Fluidmaster instructs setting the height of the overflow pipe at least 1 inch below the opening of the tank lever. In most applications it will be necessary to cut the overflow pipe to achieve a proper fit.
The refill tube goes into the overflow tube and that water fills the bowl after each flush.
Where does the refill tube go in the toilet?
The Refill Tube must be located above the Overflow Tube. If it's pushed down into the Overflow Tube, it can siphon water from the tank into the bowl causing the Fill Valve to cycle on and off. If you just have to know why this it so, and how it happens, go here.