What is the difference between cooking at low temperature and sous vide in a plastic bag?

While sous vide does mean "under vacuum," much of the cooking is done in plastic zip lock bags with no vacuum, but with the air squeezed out. The critical element is precise temperature control that you achieve with an immersion circulator. You could certainly cook this way by dumping your vegetables or meat right into the water itself. The problem is that most of the immersion circulators on the market today, would not handle the contamination of the water. They would get greasy or accumulate food particles and their performance would degrade or they would stop working. There is also the issue of losing flavor to the cooking water, which you point out. You can also achieve this level of precise temperature control with many combi-ovens, thus eliminating the need for water and bags, but most are cost prohibitive for the home cook. Another pricey, but excellent option is a temperature controlled induction burner, such as the Breville Control Freak. This would allow the same temperature accuracy without the plastic bags, and also provide the ability to use any liquid for cooking.