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Open Source Software is software for which the underlying programming code is available to the users so that they may read it, make changes to it, and build new versions of the software incorporating their changes. There are many types of Open Source Software, mainly differing in the licensing term under which (altered) copies of the source code may (or must be) redistributed.
The best example for successful open source development might be the new internet browser Firefox.
The website is powered by the Drupal open source CMS (content management system) and its modules. Further more Drupal is written in PHP, uses a MySQL database, runes on the Apache web server that runes on an Fedora powered server, all these being open source applications.