In a nutshell it adds more flow in your tank. The main plus to adding a closed loop is that you can have more controllable flow nozzles without having a ton of powerheads in your display to clutter things up.
Some people drill the outlets into the back of glass, I think Atlantis aquarium uses one.
But basicly its a mongo pump pulling water through a drain cut into it, usually in the back glass and pulls it out and divides it among either a tree of flex tubing or pvc which is then branched off to individual nozzles, simmillar to the return on a AGA overflow........there are a TON of design variations and some are specific to each tanks individual flow needs.
If you are getting into primarily SPS, you know the value of needing flow where you exactly need it to be and could see the benifits of having say a half dozen or so more line locs to accomplish that instead of a bunch of clunky powerheads.......
I think Pam? has one of the first one I saw on MARS from last years frag swap......I believe it was a simple cage with 1/2 or 3/4 PVC placed inside the tank edges and corners for a clean installation with 45s on the top giving flow from all four directions.
Maybe she will see this and post a pic of her tank to show you......
But in the end there is no set way in stone to go about doing it......just that the flow in = flow out
at the very least its a beautiful tank that needs to be seen more often!!!!