The ECM goes into closed loop when in a cruising state where stoic (efficiency) is exactly what you need.
Closed loop (cruising) is: ECM fires the injectors according to the RPM/load you're at in the fuel table, reads O2 sensor, applies the correction, and then the fires the injectors again. A "Closed Loop", get it?
In closed loop, the AFV is a global fuel map adjustment the ECM makes to keep the fuel map where it's efficient. It doesn't care why its lean or rich (temp, humidity, baro) it adjusts to stoic because you are cruising and don't need full throttle (rich) power. Why dump in extra fuel when you're just putting around?
Open loop is what happens when you whack the throttle open. The ECM refers directly to the fuel table, where it should be tuned to know what your bike needs with aftermarket parts. It references the fuel table and it's corrections (EGO) but doesn't reference the O2 sensor, so you can go as rich as you like in open loop.
Warning: Oversimplification not meant to start a nitpick distraction