close loop and stalling

I have a question regarding "close loop" systems using stepper motors
with encoders. The software is EMC. What happens when the motors
accelerate to fast and stalls using the above setup? Does it stop
all the motors when it stalls? Or, does it try to correct the motors
until it arrives at the determined position? I read somewhere that
with a close loop system you can run the motors as fast as you can
and let the encoders compensate for slow motors and it will do the
routing correctly. Can someone explain some of these things?

Thanks,