Although the star rating system should be intuitive, the Loved thing isn't (or at least, I don't think it is). I assume that both features work the same way with Apple Music as they do with music synchronised from an iTunes Library.
When you assign a star rating to a song (with your choice of one to five stars), you're simply marking your songs for your benefit. The star ratings can be used to automatically build up Playlists of your favourite songs. So when you want to play only your favourite songs, you can use the Playlist which will have grouped them altogether.
The Loved feature allows Apple Music to find other music that their algorithm thinks you may like and play it for you.
Since I don't use Apple Music, or the Loved feature, that's about all I can tell you about it. I do however, make extensive use of the star ratings for a lot of the music on my iPod. I wouldn't be without it. The two features don't serve the same purpose.
My personal opinion is that the star rating system allows you to decide what you like. The Loved system allows Apple to decide what you will like.