The second question may be best answered using mathematics. Unfortunately, having been out of university for too long, I am no longer competent in this, so one of the others will have to chime in to help. But as I recall, an open loop system is one where the elements have been cascaded without any feedback, whereas a closed loop system includes feedback.
To best understand the stability issue, you can resort to mathematics to see that a feedback system has the potential to oscillate whereas an open loop system does not. It is this potential that causes people to claim that a closed loop system may be less stable, and in this case they consider "stability" to mean lack of oscillation. (stability may also refer to how steady a circuit performs versus temperature, and it may also refer to the propensity of a microcontroller to become insane as a result of poor programming). The advantages of feedback in a control system, however, are so great that feedback is universally used in such systems. The potential to oscillate must be dealt with by the system designer. Oscillation can be avoided by carefully insuring that the feedback cannot become positive at any frequencies at which the system has gain. Common practices include adding damping, by restricting the bandwidth, by keeping gain to the minimum necessary, by avoiding unintentional feedback paths, and so on. Practical applications of how to stabilize a feedback system usually depend on the kind of system and are typically not for the beginner.