In these the loop is closed only to the drive as you say, and they are responsible for detecting errors and pass back to the controller, usually in the form of an e-stop.
Having always worked with commercial CNC I have always preferred to use the systems that close the loop back to the controller.
In my case it has been the in-slot motion cards, one of the many nice advantages is the electronic gearing, for variable gearing 1 or more slave motors off a master.
Another that some of the stand alone drive do not offer is the ability to disable the drive and turn the motor during an E-stop, when the motor is re-enabled the system knows exactly where it is.
Max.