When we close a question, it becomes "On hold" for 5 days, then becomes "Closed" thereafter. They're functionally the same thing (closed) except for two differences:
- When a question is On Hold, an edit performed on it will push it into the Reopen review queue. (I don't know if this can happen more than once.)
- "On hold" sounds temporary, and this is the reason we have this thing at all. Back in early 2013 and prior, questions would just go straight to "Closed". New users who are used to forum environments interpret "closed" as forever and final, and would often not return to revise their questions to meet the requests for improvement people were leaving in comments. "On hold" was introduced in June 2013 to convey the temporary nature of closures here and that if the question is revised to improve its quality or suitability it can be reopened — hence the bump into the review queues on revision.
If you'd like to read more around this subject, there is also a Meta Stack Exchange FAQ item on the closing markers: What is a “closed”, “on hold”, or “duplicate” question?