A limit order is basically an order left in the market looking to get matched with someone else taking the opposite side of that action IF the price moves to through that level and enough transaction volume at the price you specify happens to move you to the front of the order queue.
In your example there is no reason to place a limit order ABOVE the closing price unless pre-market indicates that the price is going to gap up. Generally you want to place a limit order at the bid price so that you don't have to pay the bid/ask spread.
Not entirely correct.
A limit order is just that. An order that limits the transaction price.
A limit order that is placed to buy at or above the ask is considered a marketable limit order. As is a sell limit order at or below the bid.
One reason to always place a marketable limit order is to prevent execution far from the bid ask spread. There is not infinite liquidity at the bid/ask price. Generally there will be an number associated with the bid/ask size such as 1 or 10 or 200 or 4500. This is the number of board lots offered at the bid or ask. So for instance lets say the bid is 75.05 bid size 1 and the ask is 75.10 at size 2. This would imply that the market maker has someone willing to buy 100 shares at 75.05 and sell 200 shares at 75.10. But without level II quotes, which show the next available prices and lot sizes standing behind the best available, a casual buyer or seller should be very careful placing a market order to sell or buy 1,000 shares given this quote with very low bid/ask sizes represented. This is because the level I quote does not show all the prices that would be paid or received to fill the whole 1,000 share order. If a market sell order is placed for the 1,000 shares, the next 300 shares after the first 100 sold at 75.05 might fill at a price of 74.75, and then the final 600 shares might be at 74.35 as the market maker fills against the best available bid orders as quickly as possible. Add in HF traders and it is possible to significantly over/under pay on a market buy/sell order.
Likewise if someone wants to buy or sell less than a board lot, there is no requirement for the market maker to honor either of the bid/ask offered on a full board lot. Again the execution price can be limited using a limit order.
Generally when I place a trade for my emerging market ETF, I place it as a marketable limit order with an all-or-none restriction. If the trade doesn't execute in a few minutes I incrementally revise the price up or down until it goes through. I may have to pay a cent or two extra per share. But I don’t get surprised like I have in the past with market orders or partially executed limit orders.