Closed loops uses a pump to intake and output water directly from your tank. The water will not go through your sump (if you have one), skimmer, UV, etc.
The purpose is to add turnover to your system w/out the use of powerheads inside the tank. A person can have one pump for turnover through a sump, and another 1 (or 2, 3..) pump(s) for additional turnover through the tank.