A closed loop uses the oref0 algorithm, which tweaks your basal levels and therefore cannot react to fast peaks or cause a hypo not easily fixed by having two candies (or giving an alarm if you're not awake). What it does is it detects an upward trend for the last X measurements, sets something such as 300% temporary basal rate, detects the trend reaching the peak, sets a 0% basal rate until you hit the predefined target (for me, 5.5 mmol/l during the day and 6.5 mmol/l at night). Here sudden wrong readings will not cause any harm or danger.

The new oref1 algorithm uses a method called super micro boluses, which can detect a sudden peak or unannounced meal, sees the first jump up, gives you a bolus so it borrows from the basals, setting the basals to 0%. The algorithm works really well for things such as eating a pizza, where you get about 50% of the carbs immediately and the rest + a bit more during the next five hours. So you take a bolus for the food, then when the fat hits in the oref1 will give you tiny boluses.

The latter is more sensitive to sensor failures, so it is on only when you told the system you have some carbs in your body, or if you happen to have a Dexcom G5 or G6 sensor with good noise readings, it will be on all the time and the system knows when the reading is faulty.