A closed loop is used to add circulation in a tank. It is an alternative to using powerheads.
The intake for the closed loop is normally one or more bulkheads high on the back wall of the tank. The flow from these intakes goes to the pump and then is pushed back to the tank through bulkheads in the bottom of the tank, bulkheads in the back wall, or through returns that come over the top of the tank.
These returns can often be hidden in rockwork so that they are not seen and can be placed anywhere to give you whatever flow you want. This is their main advantage over powerheads , which are more power efficient.
Mark