Kyle,
Closed loop means that the ecu uses the AFR value (or any sensor value of your choice) to constantly adjust your fuel map on the fly to get your actual AFR reading(or any sensor value of your choice) to a predetermined AFR Value (or any sensor value of your choice) based on a AFR value (or any sensor value of your choice) Map you create usually based on RPM and throttle position for a 2 stroke application.
Open Loop really means nothing. Basically it means that the Closed Loop control is off so the ECU does no changes to your fuel map on the fly
I think the reason its not really that great of an idea for a two stroke application is because of many reasons, but one being that the AFR guage is just not that reliable of a reading 100% of the time.
Also one thing is the way snowmobiles are used with constantly changing throttle positions and RPM and power valves opening and closing (sometimes at varying RPM's and throttle positions due to atmospheric conditions and mechanical conditions)
Because of these things, It would be making drastic changes to your fuel map at all times which would throw your tuning out of wack, which in turn would make it run poorly.
I'm sure thats some of the reasons they have not had success with constant closed loop tuning for 2-strokes.
Now for a car for instance, the AFR Reading is more reliable because of a few reasons, no burnt 2stroke Oil, more consistent RPM's, etc. Now lets say your driving down the highway on cruise, RPM's are pretty much constant, throttle positions is pretty much constant, now an ECU closed loop tuning operation has a chance to take over and get the most ideal fuel economy for those current conditions.