There are two kinds of loops that you can use in FreeStyle. A Record Loop causes time to cycle between two points. Whenever the end of a record loop is reached, the time wiper jumps back to the beginning of the loop and all players start playing whatever notes they have recorded at that time. A record loop is merely a convenience for recording notes repeatedly over the same section of time.
A playback loop, on the other hand, does not affect the passage of time at all. It affects the performance of a single take by a single player in a single section of music. When you create a playback loop for a take, you are asking FreeStyle to repeat one or more bars of the take for some number of times. For example, you could record one bar of a drum groove and create a playback loop which would cause that one bar to repeat four times, or until the end of the section. But while the drum notes are repeating, the time wiper will continue to move forward normally so other players can play normally. If the piano player does not have a playback loop, then when the wiper is in bar 4 the piano will be playing the notes that it has in bar 4, but the drummer will be playing the third repeat of the notes that it has in bar 1.
