The long chromosomal DNAs of cells are organized into loop domains much larger in size than individual DNA-binding enzymes, presenting the question of how formation of such structures is controlled. We present a model for generation of defined chromosomal loops, based on molecular machines consisting of two coupled and oppositely directed motile elements which extrude loops from the double helix along which they translocate, while excluding one another sterically. If these machines do not dissociate from DNA (infinite processivity), a disordered, exponential steady-state distribution of small loops is obtained. However, if dissociation and rebinding of the machines occurs at a finite rate (finite processivity), the steady state qualitatively changes to a highly ordered 'stacked' configuration with suppressed fluctuations, organizing a single large, stable loop domain anchored by several machines. The size of the resulting domain can be simply regulated by boundary elements, which halt the progress of the extrusion machines. Possible realizations of these types of molecular machines are discussed, with a major focus on structural maintenance of chromosome complexes and also with discussion of type I restriction enzymes. This mechanism could explain the geometrically uniform folding of eukaryote mitotic chromosomes, through extrusion of pre-programmed loops and concomitant chromosome compaction.