A tennis ball returns only 55% or so of its impact energy, but strings return more than 90%. When a ball collides with strings, both deform to some extent. The more the strings store the energy of the collision by deforming like a trampoline, the less the ball stores energy by flattening. To get the most energy return out of the collision, we want the strings to store as much of the total energy as possible, because they will give back more than 90% of it, whereas almost half of any energy stored in the ball will be wasted. Looser strings deform more easily, thus storing more of the energy of the collision and minimizing the amount wasted by the ball.
At this point, looser strings sound ideal. We should all know better than to waste energy, after all. So, why do looser strings cause a loss of control?
As the looser string bed compresses more, the ball stays on the strings longer, during which time any tiny changes in your racquet position can change the path of the ball. The ball isn't on your strings long enough for you to consciously do anything to it. Your brain can't execute any actions in the few milliseconds available, but that few milliseconds is enough time for unintended movement to occur, especially when an off-center hit exerts a turning force on the racquet head.
If you don't hit particularly hard or close to the lines and thus don't need especially precise control, looser strings make sense for the sake of your arm. When looser strings compress more, the impact of the ball occurs over a longer period of time, thus making the shock less severe at any one moment.
If you like to hit hard and close to the lines, tighter strings are probably your better choice. As noted, you'll have more control, and you'll get slightly more spin because the ball will flatten out more on your strings, giving each string a better bite on the ball.
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