Open source refers to software that has "open" source code. What this means is that the source code is freely distributed and can be viewed, modified, and redistributed by anyone. However, don't begin to think that open source software is only available as source code. Most open source software projects are also distributed in compiled/binary form which means they come as comlete programs ready to install!

The official open source definition is maintained by the Open Source Initiative (OSI), which is a non-profit organization dedicated to this task.

I believe the following quote from the OSI's website pretty much sums up open source:

"The basic idea behind open source is very simple: When programmers can read, redistribute, and modify the source code for a piece of software, the software evolves. People improve it, people adapt it, people fix bugs. And this can happen at a speed that, if one is used to the slow pace of conventional software development, seems astonishing.

We in the open source community have learned that this rapid evolutionary process produces better software than the traditional closed model, in which only a very few programmers can see the source and everybody else must blindly use an opaque block of bits."