So if I understand this correctly; the bolt stays open after each shot and is dropped forward when the trigger is pulled, is that correct?
Yes.
Open bolt blowback firing sequence:
1) pull trigger, 2) bolt goes forward under spring pressure, 3) bolt strips fresh round from magazine, 4) bolt pushes round into battery, 5) firing pin is released, 6) BANG, 7) recoil pushes bolt back into rearward position and extracts empty case.
Closed bolt blowback firing sequence:
1) pull trigger, 2) firing pin is released, 3) BANG, 4) recoil pushes bolt back into rearward position and extracts empty case, 5) bolt goes forward under spring pressure, 6) bolt strips fresh round from magazine, 7) bolt pushes round into battery.
The advantage of an open bolt is that a fresh round only contacts the bolt for a fraction of a second, so the primer won't "cook off" and spontaeously fire if the bolt is extremely hot. This is good when a gun has a very high rate of fire.
The disadvantage, from an NFA and/or ATF perspective, is that it's often relatively easy to convert an open-bolt firearm to full-auto by removing whatever trigger mechanism restrains the bolt to the rear between Step #7 and Step #2. It's inherently more difficult to convert a closed-bolt gun to full-auto.
To put it another way, in an open-bolt gun, the trigger restrains the bolt; in a closed-bolt gun, the trigger restrains the firing pin.