A closed loop is usually part of what is called a feedback system. A feedback system collects information on how a system is operating, then feeds that information back to affect how the system is working. They can be very simple, and very sophisticated.
This vehicle has a cruise control unit to help it maintain a set speed. When it falls below it, a computer sends a signal that moves the throttle linkage and increases the fuel reaching the engine, and speed. It has the opposite effect when the vehicle exceeds the set speed. A cruise control unit that continually monitors the system is called a closed loop system.
A closed loop system in an engine exhaust system can monitor the amount of oxygen in exhaust gases, to maintain a constant air-fuel ratio.
Source: CDX Global
