When I look back up this post, I can see it now. The gain is calculated by dividing collector at voltage by voltage at emitter. When emitter voltage increases then the ratio of collector voltage to emitter voltage will reduce and so the gain reduces. That's something I learned on this post. Sorry, should have seen that one.
Well, for me, the explanation here below is the most clear I ever read. Short and to the point. Now I understand!
Anyway, the negative feedback is from collector to emitter, and essentially works like this:
The collector current is 'near enough' the same as the emitter current (ignoring the extra tiny base current in the emitter).
So if the collector resistor is 2000 ohms, the emitter resistor is 1000 ohms, and the current is 1mA, the voltage drop across the emitter resistor is 1V and across the collector resistor is 2V - so a gain of 2. To calculate it - 2000/1000=2. Simple ohms law.
If you drop the emitter resistor to 100 ohms, with the same 1mA, you now have only 0.1V across the emitter resistor, so a gain of 20 (calculated as 2000/100=20).
Make it 10 ohm, a gain of 200 (2000/10=200).
This is all DC and AC gain, but by placing a capacitor across the emitter resistor you can increase the AC gain (as you're lowering the AC emitter 'resistance'), while keeping the DC gain the same.
So back to the first example, 2000 and 1000 ohms, gain of 2 - now put a capacitor across the emitter, this essentially 'shorts' the emitter resistor out for AC, giving a gain of 2000/0=infinity. Obviously this doesn't happen, as it's not zero ohms, and the transistor only has a certain amount of gain - but by doing so you get the maximum gain possible from the transistor, as there's zero negative feedback.
On the 'bad side', zero negative feedback only means the lowest quality possible, and the stage isn't terribly linear - but it's all swings and roundabouts.
By applying 'reasonable' amounts of negative feedback you get better quality, and a MUCH more reproducible circuit - which is why it's commonly done that way.