I'm no hydraulics expert but I am a layman so I'll give it a go.
In an "open centre" hydraulic system the centre or neutral position for the valve/s allows the oil from the always delivering pump to flow straight through the valve and back to the reservoir at little or no pressure.
In a "closed centre" system the centre position will block the flow from the pump, the pump senses this and turns off the flow. When a valve is activated, the pump also senses this and restores the flow, allowing the valve to send the oil to the cylinder or motor.
Can't comment too much on a closed centre system as every tractor I've had was and is open centre.
