It lets you mount a file as a filesystem, instead of an actual hardware device. I think it's called "loopback" because instead of reading from /dev/whatever it loops back to /dev/original and reads the specified file.

See the man page for `mount`: https://linux.die.net/man/8/mount (search for "loop")

The right term is a 'loopback device' which allows you to use a file on an existing filesystem as a block device.

Here's what the flow looks like:

open(/path/to/myfile) ->

ext4 driver ->

block operations on /dev/loop0 ->

open(/path/to/loop-file) ->

block operations on the data region of the file ->

btrfs driver ->

block operations on /dev/sda