Current loop allows one to transmit a single value and power a transmitter, So, the 4mA powers the transducer and the 4-20 mA is 0 to100% of the sensor value. Usually 0-20 mA is available too. By placing a 250 ohm resistor at the end of the loop, one can convert to voltage. e.g. 0-5V or 1-5V. 1-5V avoids quantization errors.
There is active and passive current loop devices too.
In a plant, the signals are usually far apart distance wise.
In a laboratory setting, pseudo-differential voltage measurement is available. The external device can be grounded to it's own local ground and measured pseudo-differentially. Low to ground and Hi to ground measurements are done. Your not connecting the grounds together, which would result in a ground loop. This measures the output of a device,
Now suppose it needs a setpoint. You can use current loop to provide the setpoint 0-20 mA gets converted to 0-5V without a ground loop.
For one instrument, it doesn't work very well and that's a linear power supply. The archetecture makes the setppoint and and the control voltage relative to the plus output. let's suppose this is a grounded power supply.
Now suppose you want to measure current. There is a resistor in the + output. You have 7 power supplies that need to be controlled/
the references are all over the map. You need isolated voltage input for current (voltage across a low value resistor) and Isolated current output for the setpoint. Convert 0-20 mA to 0-5V. let's say the output voltage is measured using a resistive divider, taking 0-40V orr 0-120V DC to 0-5V.
You can use an isolated digital interface IEEE-488, USB or RS-485 as well. I had exactly that problem to solve.+