Open source philosophy is characterized by software development directed by peer production and collaboration through an active community of developers. Contrast this to the more standard centralized development models used by commercial software companies where a finite set of developers produces a product for sale using a defined set of procedures that ultimately result in an end product whose architecture and source material are closed to the public.

Open source projects conceptually have differing concurrent agendas, approaches, and production. These facets of the development process can come from anyone in the public (community) that has a stake in the software project. The open source environment contains new copyright, licensing, domain, and consumer issues that differ from the more traditional development environment. In an open source environment, the end product, source material, and documentation are all available to the public at no cost.

A benchmark example of an open source project is the Linux kernel, which was initially conceived and created by Finnish computer science student Linus Torvalds in 1991. Conversely, a good example of a non-open source project is the Windows® family of operating systems developed by Microsoft® Corporation.

Wikipedia has a good historical description of the Open Source Philosophy here. You can also find helpful information on how to participate in the Linux Community here.