GRACIE CLOSED GUARD ISN'T REALLY EFFECTIVE ANYMORE ...
A student from UNC sent me this email in 2015 and other people might be thinking the same.
He starts : "I took your BJJ LFIT and PHYA (loved them!) and graduated from UNC last year. I just had a quick question that came up while I was at work today that I wanted to ask you.
I was talking with someone at work about martial arts and BJJ came up and they mentioned that the Gracie closed guard isn't really effective anymore in the UFC because people have learned to "stack the hips." Now, I hadn't heard of this (I don't really watch the UFC) and I wasn't exactly sure what they meant by that even after they explained it to me, but from what I learned in your classes I thought it surely wasn't true that the closed guard would forsake me! Closed guard seems like such a good strategy to keep the distance close while manuevering your way to a choke or roll or something. Anyway, this person at work suggested I watch Kendall Grove (who is supposed to be a BJJ guy) vs. Mark Munoz to see what he's talking about."
Excellent question! Closed guard with punch protection is indeed a great strategy if you happen to end on your back vs. a bigger, stronger opponent who wants to punch your face into the pavement.
You are correct in looking for opportunities while in the closed guard to improve position or apply a submission.
Let's be clear to understand there is a difference when learning or discussing Gracie Jiu Jitsu for street self-defense (as taught in class) vs. Jiu Jitsu as part of UFC/MMA type fighting.
DIFFERENCE IN STRATEGY
In a street fight for self defense, the Gracie Strategy encapsulated is

In addition,
We focus on techniques that force our opponent to exhaust his energy while preserving our own and
we utilize Verbal Jiu Jitsu to avoid and diffuse the fight whenever possible.
The MMA/UFC strategy actually does mirror the Gracie Jiu Jitsu strategy in the aspect of
- avoid getting knocked out
- control the opponent
- submit when possible
However, if your focus is energy preservation, you may lose the fight to a Judge's decision for being too conservative and you definitely can't use Verbal Jiu Jitsu to avoid the fight. Most likely you are conditioned to sustain a higher level of damage than the average person or have an anatomical structure that facilitates that so you will fight in a much different manner to gain points or achieve the knockout.
In a nutshell, comparing the two, is like comparing Ping Pong with Tennis, they share many similarities but each is very different because of the accompanying rules.
It's always important to be realistic in the type of "Bad Guy" you are going to encounter in the street. The chart below shows 4 basic levels of street opponents that may attack you.

Once you have mastered Gracie Combatives - you are fully equipped to handle Level 1 and 2 attackers.
The Master Cycle is the natural progression thereafter, and allows one to continue enjoying and benefitting from Gracie Jiu Jitsu training while preparing for that odd fight, if ever, versus a level 3 or 4 opponent.
GRACIE DURHAM