Loop devices on Linux are virtual devices which can be used to mount files like real devices. For historical reasons you have 8 such loop devices by default, but in current Kernel releases you can of course use more than just 8.
The UNIX philosophy is based on the DRY principle which declares: “Don't repeat yourself”. Therefore, a program just does what it's made for and uses libraries or even other programs on your system to do a more advanced job. Some of these auxiliary programs are user definable and probably you already know the EDITOR environment variable, which specifies your default editor for the console. This is used, e.g., for the command visudo, which opens your /etc/sudoers file safely, or by svn to input a commit comment. But another important component is your console pager, which is used to display textual content on the console.
