I have this question that has been bothering me for a while. How do the mods on the iPhone work? I mean, everyone's been saying iOS is the most closed OS, even with Cydia, but still able to mod crazily. Is it an overlay? Or is it just the burning sensation of the developers?

Thanks.

It is the most closed OS until you jailbreak it.

ps: Not that it becomes a proper smartphone even with JB, but still... it's better than its factory state.

I think its patch which roots it like android.
I just bought a tablet with ics 4.0.1 and rooted it.
Android isn't much better... I cant get the dame thing online at home
because android hasnt enabled IBSS adhoc mode!!!

Rooting is not a patch on Android. It refers to getting the "su" binary on the device.

How open is it after jailbreak?

i think both of them at the same time. When an idevice is jailbroken, you can add pretty much any ability to the device that is non-existent or improve the existing ones. But this also comes with a price. The more you tweak the device, the more it consumes cpu and ram.

I see. So is it somewhat an overlay for iOS (the mods)? Or does it replace the system files? If it does, would that mean it is somewhat really open?

Depends on your definition of "open". If fileA can be replaced by fileB and you think that's being open, then I guess iOS is open. But then any other OS is equally open, as long as you have the ability to replace files being root/administrator, which is the case for most OSs.

Some of them are overlay and some of them are replacements. For example custom launchers are usually overlays but custom lockscreens are mostly replacements. Also lots of tweaks are added mods rather than overlays or replacements. Jailbreak is something more like extending the os.
Let's say ios is not "more open" but more moddable than most os's out there. (with jailbreak ofcourse)

I guess we can also say that one of other factors that iOS is moddable is the developers, right?