An open order is an order that is waiting to enter processing. When you first place an order, it is an open order.
Once a day, open orders for available items enter processing. At that point, an open order becomes a processing order. Payment is then sought for the processing order. After payment is received, the processing order is either shipped (if you've selected Ship When Available/Ship Now for the handling method) becomes available for shipping from your Private Warehouse (if you've selected Private Warehouse for the handling method).
If your order is for a backordered item or preordered item, your order will remain an open order until the item comes into stock to fill your order.