A closed-form solution solves a problem in terms of a finite number of functions/operations from a "standard" set. If your method solves the optimization problem in a defined number of steps, it could potentially be described as closed form. In which case, you could describe this by writing the algorithm as pseudocode and/or providing equations establishing that your solution is closed form. It's likely that adding or substantially revising content is expected as you've been asked to make major revisions.
If your solution is closed-form, I think the main consideration is if whether that adds to the focus of your paper. If it isn't relevant, it'd probably be best to include pseudocode/equations in an appendix. You could also reply that "it's a closed form solution for insert reasons; however, we don't think that extended discussion will add to the focus of the paper (insert paper focus)".
If your solution is not closed-form, reply that "the solution is not closed form as insert reasons".
If you're still unsure and have asked your colleagues, I would reply that "we're unsure specifically what you're asking". Ideally, this would be followed by comments addressing a couple of possible interpretations.