Soft matte refers to how the film was shot (the entire film area exposed, with the intention to crop out the top and/or bottom in projection). Open matte refers to how the video transfer was done (the entire exposed film area instead of cropped edges).
In theory, it's better than pan-n-scan because it shows the whole frame, but in practice, you're still throwing off the composition of the frame by adding space the director/dp didn't intend for you to see.
The fullscreen version of Finding Nemo was a faux-open matte -- they animated extra backgrounds to extend the top and bottom of the frame.