In a Nutshell

"Open source" captures the idea that software should be free as in speech: others should not be able to restrict what you say or how you say it.

For users

Open source software is typically (but not always) free. It is often high quality software that (most importantly) is developed by a community rather than one company.

For software developers

"Open source" refers to the fact that along with the program you also have access to the computer code that produced it. You can make any changes you want, and provide services to users of that software for money.

For businesses

Since your software is not produced by one company who keeps the source code secret, you are not affected by the business decisions of one company (who may decide to change features, charge more, or stop support for an old version). You always have the option of contracting a skilled third party to support your software. The software is also more reliable because users and other businesses contribute fixes and enhancements.

A bit of Open Source Software History

Perhaps to really understand what open source software really is you have to go way back in time. Firstly there was Unix, which was created in the late 60s. In the 70s Unix become popular and was licensed to a few large corporations. Another license was given to a University which come up with an educational version of unix now called FreeBSD. At that time only large companies and universities could afford to run Unix. In the early 80s there was a group of enthusiats who decided to play around with the way Unix operates, this period become known us the hacker period and it brought about what we call now hacker culture. A hacker is anyone who is curios and eager to learn about computers.

In 1984 a clever hacker by the name of Richard Stallman (founder of the Free Software Foundation), authored the GNU General Public License. Stallman's objective was to come up with an operating system which had similar chararcteristcs to Unix, but also which did not give its users any restrictions to use and express themselve through it. The license gave developers freedom to participate in projects and this saw the development of utilities and programs of a Unix-like operating system and the only thing that was missing was the kernel, a piece of program which is the core of an operating system.