traditionally the pump pushes water into the tank from the sump. the water then flows out through an overflow into a sump. when the pump is turned off, extra water returns to the sump to the level of the overflow.
with a closed loop, the sump portion of the circulation does not exist. the pump pushes water into the tank (generally through a hole drilled on the back wall of the tank) and it returns directly to the pump (again usually through a hole in the tank). since there is no sump involved, the water level does not drop when the pump is turned off.