From Wikipedia: http://en.wikipedia.org/wiki/Open_source
|Open-source software (OSS) is computer software available in source code form for which the source code and certain other rights normally reserved for copyright holders are provided under a software license that permits users to study, change, and improve the software.|
It’s not necessarily free as in zero-cost, but it is usually free of complex per-computer, per-user licences. Major parts of the web and internet use open-source, for example, two thirds of web servers are Apache: http://httpd.apache.org/ the best general purpose web server.
You may feel, it’s free so it’s worthless isn’t it? That’s a question to ask IT departments in Canary Wharf and the City, many of whom make extensive use of open source software.