true closed loop vs. hobby closed loop

Hello,
I work in a machine shop and we have several retrofitted
lathes/mills using OpenCNC and various motors/drives including
Yaskawa servo motors/drives, we also have a Haas VF4 VMC. These are
all high dollar, industrial level cnc controls, with "true" closed
loop feedback from the encoders.

It seems to be widely considered that true closed loop actually
allows the computer control to self-adjust the motors if error in
positional accuracy has occured. However, all the machines we have,
including the Haas (not a retrofit) have an allowable following error
(FE) on each axis. If that FE is exceeded, the drive faults out and
cuts power to the servo motor. If the positional error falls within
that FE range, then inaccuracy does occur, it's happened to me.
Furthermore, this FE is used in axis crash situations. Say you crash
Z into your vice/part/table, as the axis stops moving due to hitting
a solid object, FE is exceeded and the drive faults. Attempted
positional compensation via the control would simply drive the axis
into the part harder and cause more damage to the machine.

Now, with that in mind, compare the +/- 128 counts 'FE' on the
Gecko drives. If positional error exceeds 128 counts, then the drive
faults out and servos stop.

In either scenario, it appears that the same thing happens, and
that even in the case of 'true' closed loop controls, there is no
attempt to correct the positional accuracy, just a fault.

My question is where is the difference? I know software is the
key to closing the loop. Is it simply that with Geckos, your
step/direction software will happily continue to run the program
without knowledge of the drive faults, and that on the Haas
control/OpenCNC software control the software is aware of the fault
and stops running the program and displays an 'excessive following
error exceeded' message?

Is this true? If not, then please explain to me the difference
between hobby closed loop via Gecko Rutex etc... and
industrial 'true' closed loop via our Haas VMC and OpenCNC retrofit
control.