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Micah explains that open source refers to software released under open source licenses, which grant users specific intellectual property rights, primarily copyright rights. These rights typically include reproduction, usage, and the ability to create derivative works. For instance, users may borrow source code to develop their own programs or utilize compiled code libraries through function calls. Open source licenses are generally free for anyone to sign, and the source code is usually made available at no cost, allowing unrestricted access for those who comply with the license terms.